World Order Breakdown Spotlights Permissionless Crypto Assets

Renowned investor Ray Dalio has issued a stark warning that the international framework established after World War II has completely collapsed, ushering in an era he describes as a "law of the jungle." In this chaotic environment, raw power overrides established rules in determining global outcomes. Meanwhile, cryptocurrency enthusiasts are seizing this opportunity to champion decentralized assets that function independently of government oversight.

Global Tensions and Economic Pressures

In his recent publication on X, the founder of Bridgewater Associates detailed a landscape marked by both domestic unrest and international conflicts. He highlighted how major global powers are trapped in a classic "prisoner's dilemma," forcing them into a cycle of escalation or perceived vulnerability. This dynamic spans critical areas such as international trade, technological advancements, capital movements, and a growing number of military hotspots. Dalio cautioned that such conditions make the outbreak of what he terms "stupid wars" all too probable, heightening geopolitical risks worldwide.

Dalio further explained that these external pressures often intersect with internal economic challenges within nations. When economies face significant strain and income disparities widen dramatically, governments tend to respond with aggressive fiscal measures. These include substantial tax hikes and massive expansions in the money supply, which effectively erode the value of existing financial holdings rather than resorting to outright debt defaults. This predictable pattern of policy responses creates fertile ground for uncertainty in traditional financial systems.

Precisely this kind of volatile setting has historically favored non-political stores of value, such as Bitcoin and gold. Proponents of cryptocurrencies argue persuasively that as nations increasingly resort to financial sanctions, asset seizures, and unchecked money printing, savvy investors will turn toward alternatives. These are assets that individuals can own, store, and transact without dependence on centralized banks or state-controlled payment infrastructures, offering a layer of protection against political interference.

Liquidity Surge Boosts Demand for Hard Assets

Recent economic analyses from Econovis reveal a dramatic expansion in global broad money supply, surging from approximately $26 trillion in 2000 to a projected $142 trillion by 2025. This unprecedented growth underscores the scale of monetary expansion occurring across the world economy over the past two decades.

Insights from former fund manager Asymmetry emphasize a strong correlation between major Bitcoin price surges and periods of M2 money supply growth. According to their observations, every significant BTC rally has aligned with expansions in this key monetary metric, and current trends suggest another such wave may be underway, potentially driving further appreciation in cryptocurrency values.

Similarly, gold prices have closely mirrored the trajectory of the US M2 money supply over time. This parallel movement reinforces gold's longstanding reputation as a reliable safeguard against inflation and excessive monetary policies, appealing to investors seeking stability amid currency devaluation risks.

The Rise of Neutral, Borderless Money

Dalio's analytical framework sheds light on how governments routinely deploy tools like asset freezes, restrictions on capital markets, and comprehensive embargoes. These measures illustrate the inherent vulnerabilities in conventional savings accounts and payment systems, which remain subject to political whims and the risks associated with specific jurisdictions. In response, the appeal of decentralized, permissionless money that transcends national boundaries gains unprecedented prominence.

Bitwise CEO Hunter Horsley succinctly voiced the prevailing sentiment within the crypto sector, questioning whether innovative solutions for global, permissionless, and apolitical monetary systems and financial infrastructure are under active development, underscoring their potential critical importance in the current climate.

From an investment portfolio perspective, Asymmetry echoes this view, positing that the scenario Dalio outlines—a disintegrating global order compounded by what macroeconomists like Lyn Alden and Luke Gromen describe as fiscal dominance—represents one of the most favorable structural environments for hard assets in the past eight decades. Fiscal dominance occurs when a government's borrowing requirements begin to heavily influence central bank decisions, often leading to sustained monetary accommodation.

It is worth noting, however, that Dalio's observations do not constitute a specific endorsement or prediction for Bitcoin's performance. The rationale for investing in cryptocurrencies continues to be influenced by numerous variables, including fluctuating interest rates, evolving regulatory landscapes, overall market liquidity conditions, and shifts in investor risk tolerance. Nevertheless, his commentary supplies a compelling macroeconomic storyline that crypto advocates are leveraging to posit that demand for truly neutral money—free from centralized control—stands to rise significantly as global fractures deepen and geopolitical uncertainties intensify.