Billionaire investor and Bridgewater Associates founder Ray Dalio says the global order established after World War II is breaking down. He argued that the world is entering what he calls “Stage 6” of the “Big Cycle.”

His warning has triggered renewed debate about geopolitical instability and its impact on cryptocurrency markets.

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Ray Dalio Says We’re in “Stage 6” as World Order Breaks Down

Dalio frames the current moment through what he calls the “Big Cycle.” This is a pattern in which dominant empires rise, peak, and eventually decline. According to this model, the world is now in “Stage 6.”

“In my parlance, we are in the Stage 6 part of the Big Cycle in which there is great disorder arising from being in a period in which there are no rules, might is right, and there is a clash of great powers,” the post read.

Unlike domestic political systems, Dalio argues, international relations lack effective enforcement mechanisms such as binding laws or neutral arbitration. As a result, global affairs are ultimately governed by power rather than rules. When a dominant country weakens and a rival gains strength, tensions typically increase.

He identifies five types of conflict that tend to escalate in such periods: trade and economic wars, technology wars, capital wars involving sanctions and financial restrictions, geopolitical struggles over alliances and territory, and finally, military wars. 

Most major conflicts, he argues, begin with economic and financial pressure long before bullets are fired. Dalio draws comparisons to the 1930s, when a global debt crisis, protectionist policies, political extremism, and rising nationalism preceded World War II. 

He notes that before large-scale military conflict erupted, countries engaged in tariff battles, asset freezes, embargoes, and financial restrictions, tactics that resemble measures used today.

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In his view, the most significant flashpoint in the current cycle is the strategic rivalry between the United States and China, particularly over Taiwan.

“The choice that opposing countries face—either fighting or backing down—is very hard to make. Both are costly—fighting in terms of lives and money, and backing down in terms of the loss of status, since it shows weakness, which leads to reduced support. When two competing entities each have the power to destroy the other, both must have extremely high trust that they won’t be unacceptably harmed or killed by the other. Managing the prisoner’s dilemma well, however, is extremely rare,” Dalio wrote.

However, warnings like this are not new. Dalio has issued similar cautions for years. This suggests his recent remarks are part of a consistent long-term thesis rather than a sudden shift.

Still, it’s worth noting that rather than making a direct prediction about military conflict, Dalio argues that the structural conditions historically associated with major power transitions are now in place.

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Broader Implications for the Crypto Market

Dalio’s warning raises questions about how digital assets might perform. In periods marked by sanctions, asset freezes, and restrictions on cross-border finance, cryptocurrencies can attract attention as alternative settlement rails that operate outside traditional banking infrastructure. 

Bitcoin, in particular, is often viewed as resistant to censorship and capital controls. These characteristics could become more relevant if financial fragmentation accelerates. At the same time, cryptocurrencies remain sensitive to global liquidity conditions. 

Historically, geopolitical stress and policy tightening have triggered broad risk-off reactions across markets. This, in turn, may weigh on equities and high-beta assets alike. 

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If rising tensions lead to tighter financial conditions or reduced investor appetite for risk, crypto markets could experience heightened volatility in the short term.

“For stocks, this likely means higher volatility, lower valuations, and sharper swings as geopolitical risks rise. For crypto, weakening trust in traditional money could drive long-term interest, but short-term stress may still trigger severe price swings,” analyst Ted Pillows stated.

Another key factor is that heightened geopolitical tensions may push investors toward traditional safe-haven assets. Gold has historically benefited during periods of uncertainty, as capital seeks stability and long-standing stores of value. 

In recent months, precious metals have surged to record highs, while cryptocurrencies struggled to recover following October’s tariff-driven market downturn. This divergence highlights that, despite Bitcoin’s “digital gold” narrative, many investors still treat gold as the primary hedge during acute geopolitical stress.

If tensions deepen, capital flows could continue favoring established defensive assets over more volatile alternatives. For crypto markets, that dynamic suggests a complex outlook: while long-term narratives around monetary debasement and financial fragmentation may strengthen, near-term price action could remain vulnerable to shifts in global risk sentiment.

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