Bridgewater Associates founder and billionaire Ray Dalio believes that financial markets will be in a poor state for the next five years, considering the tightening of monetary policy in the United States and global crisis. Unfortunately, he says, the same rule will most likely apply to the cryptocurrency market.
Through the years of bullrun on financial markets that began back in 2009, we saw nothing but the unstoppable growth of most stock and investment tools across all industries, including cryptocurrencies.
Despite the massive correction we saw in 2014, 2017 and 2022, digital assets remain among the most profitable assets on the market with up to 10,000% of profit in the last decade. However, the inflation spike and the troublesome state of economies across the world caused the beginning of the rate hike cycle.
With the tightening of monetary policy, investors are moving their funds away from high-risk assets like Bitcoin and any other cryptocurrencies. Unfortunately, the trend will continue until the Fed and other financial regulators pivot.
However, the change in monetary policy will not have an immediate effect on the stock market, which is why Dalio's forecast is so negative. Historically, the end of the rate hike cycle leads to a bloodbath on financial markets with the average 20% plunge on indexes like S&P500.
Luckily, the billionaire's prediction might not be 100% accurate since there are some signs of an upcoming reversal on assets like Bitcoin. But they are mostly tied to the on-chain performance of the cryptocurrency, which has not proven itself a proper analysis technique yet.