Ray Dalio Warns Fed Bubble Could Send Gold, Bitcoin Soaring — Then Implode

Ray Dalio has issued a stark warning that the Federal Reserve’s decision to halt quantitative tightening marks the beginning of a dangerous cycle of “ stimulating into a bubble ” rather than responding to economic ￰1￱ billionaire investor and Bridgewater Associates founder argues that the Fed’s shift from balance sheet reduction to expansion represents a classic late-stage debt cycle dynamic that could drive gold and Bitcoin dramatically higher before an inevitable ￰2￱ Fed announced that it would end quantitative tightening, effective December 1, 2025, transitioning to balance sheet maintenance at $6.5 trillion, while redirecting agency security income into Treasury bills rather than mortgage-backed ￰3￱ views this as more than a “ technical maneuver ,” as officials describe it, particularly as the shift occurs alongside large fiscal deficits and strong private credit creation.

Meanwhile, the S&P 500 earnings yield of 4.4% barely exceeds the 10-year Treasury yield of 4%, leaving equity risk premiums at a razor-thin 0.4%. ￰0￱ — Ray Dalio (@RayDalio) November 5, 2025 Historic Reversal: From Depression Stimulus to Bubble Fuel Dalio emphasizes that previous quantitative easing deployments occurred under fundamentally different conditions, characterized by economic contractions, falling asset valuations, low inflation, and wide credit spreads. Meanwhile, the current environment features the ￰4￱ are hitting new highs, the economy is growing at a rate of 2% annually, unemployment is at just 4.3%, and inflation is running above the Fed’s 2% target, at over 3%.) October 29, 2025 Ted Pillows also warned that crypto markets, historically sensitive to liquidity conditions, may not bottom until actual quantitative easing begins rather than merely stopping ￰5￱ cited the 40% decline in altcoins that followed the Fed’s 2019 QT pause before fresh stimulus ￰6￱ Surges as Liquidity Mechanics Shift Gold has responded dramatically to the policy shift, recovering above $4,000 per ounce after initial volatility following the Fed ￰7￱ World Gold Council reported that global demand in Q3 2025 increased 3% year-over-year to 1,313 tons, with investment demand reaching the highest quarterly total on record as prices achieved 13 new all-time highs during the quarter.