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Billionaire investor and founder of Bridgewater Associates Ray Dalio confirmed that the global order established after the Second World War is collapsing. He stated that the world is entering what he calls the “sixth stage” of the “Great Cycle”.
His warning opened a renewed debate about geopolitical instability and its impact on cryptocurrency markets.
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Ray Dalio says we are in “Phase Six” with the collapse of the world order
Dalio saw the present moment through what he calls the “Great Cycle.” This is a pattern in which dominant empires rise, peak, and eventually decline. According to this model, the world is now in a “sixth stage”.
He posted on X He said: “According to my terms, we are now in the sixth phase of the great cycle, in which great chaos emerges as a result of entering a period in which there are no rules, where law becomes power, and clashes occur between the great powers.”
In contrast to domestic political systems, Dalio pointed out that international relations lack effective enforcement mechanisms, such as binding laws or neutral arbitration. As a result, world affairs are ultimately governed by force rather than rules. As a hegemon weakens and a rival becomes stronger, tension usually rises.
He identified five types of conflicts that tend to grow in such periods: trade and economic wars, technological wars, capital wars involving sanctions and financial restrictions, geopolitical conflicts over alliances and territory, and, finally, military wars.
Dalio explained that most major conflicts begin with economic and financial pressure long before shots are fired. Compare this to the 1930s, when the global debt crisis, protectionism, political extremism and the rise of nationalism preceded World War II.
He said that before the outbreak of large-scale military conflicts, The countries are in tariff battlesthe freezing of assets, the imposition of embargoes and financial restrictions, tactics similar to those used today.
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He saw the most important focal point in the current cycle as the strategic rivalry between the United States and China, especially in Taiwan.
“The choice that the opposing states face – between fighting or retreating – is a very difficult one to make,” wrote Dalio. “Both choices are costly – the fight costs lives and money, and the state of retreat costs, because it shows weakness, which leads to reduced support. When two competing entities have the power to destroy each other, each must have a very high confidence that the other will not hurt him or kill him unacceptably. But the management of the rare dilemma of the prisoner is very good.”
However, it should be noted that Such warnings are not new. Dalio has issued similar warnings for years, suggesting his latest comments are part of a long-term thesis rather than a sudden shift.
However, it is worth noting that rather than making a direct prediction of military conflict, Dalio emphasized that the structural conditions that are historically associated with major power transitions are now in place.
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Broader implications for the digital currency market
Dalio’s warning raised questions about how the digital assets will perform. In periods characterized by sanctions, asset freezes and restrictions on cross-border financing, cryptocurrencies are attracting attention as alternative settlement channels that operate outside the traditional banking infrastructure.
Bitcoin, in particular, is seen Like resistance to censorship And often capital restrictions. These characteristics may become more important if financial fragmentation accelerates. At the same time, cryptocurrencies remain sensitive to global liquidity conditions.
Historically, geopolitical tensions and policy tightening have triggered broad risk-off reactions in the markets. This, in turn, puts pressure on stocks and riskier assets.
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If the growing tension leads to a tightening of financial conditions or a decrease in investors’ appetite for risk, cryptocurrency markets may see increased volatility in the short term.
For stocks, this likely means increased volatility, lower valuations and stronger volatility as geopolitical risks increase, analyst Ted Bellows said. For cryptocurrencies, weak trust in traditional money can drive long-term interest, but short-term tensions could lead to strong price fluctuations. He stated that.
Another important factor is the escalation of geopolitical tensions It can push investors towards Safe traditional assets. Gold has historically benefited During periods Where uncertainty prevails, capital seeks stability and established stores of value.
In recent months, precious metals have seen growth to record levels, while cryptocurrencies have struggled to recover following the collapse of the rate market in October. This difference highlights that, despite the Bitcoin narrative As “digital gold”, many investors They still see gold as the primary hedge during acute geopolitical tensions.
If tensions increase, capital flows may continue Giving preference For well-established defensive assets at the expense of more volatile alternatives. This illustrates the dynamics in cryptocurrency markets: even if long-term narratives about money erosion and financial fragmentation can gain strength, short-term price movements can be vulnerable to changes in sentiment regarding global risks.
