Ray Dalio Says the World Order Established After World War II Is Breaking Down

• Ray Dalio says the world has entered “Stage 6,” marked by rising great power conflict.
• Escalating trade, tech, and capital wars could reshape global financial systems.
• Crypto may gain long term from fragmentation, but short term volatility may rise.

Billionaire investor Ray Dalio has renewed his warning that the global order established after World War II is deteriorating, describing the current period as a late-stage phase in a long historical cycle of rising and declining powers. 

In recent remarks, the Bridgewater Associates founder said the world is now in what he calls “Stage 6” of the “Big Cycle,” a phase marked by disorder, weakened rules, and intensifying rivalry between major nations.

Dalio’s assessment has prompted discussion about how geopolitical instability and structural shifts in global finance could influence crypto markets.

Dalio Describes “Stage 6” of the Big Cycle

Dalio explains global developments through a recurring pattern in which dominant empires rise, peak, and eventually decline. According to his model, “Stage 6” is characterized by the erosion of established rules and increasing reliance on power rather than institutions to resolve disputes.

He argues that, unlike domestic systems, international relations lack binding enforcement mechanisms. As the dominant country weakens and the challenger strengthens, tensions tend to escalate. 

Dalio identifies five forms of conflict that typically intensify during such transitions: trade and economic disputes, technology competition, capital wars involving sanctions and financial restrictions, geopolitical struggles over alliances and territory, and ultimately military confrontation.

Drawing comparisons to the 1930s, he notes that tariff battles, asset freezes, and embargoes preceded large-scale war. He said similar tactics are visible today. In his view, the most flashpoint in the current cycle is the strategic rivalry between the United States and China, particularly regarding Taiwan.

Dalio has issued comparable warnings in prior years, indicating that his latest remarks align with a consistent long-term thesis rather than a sudden change in outlook. He stops short of predicting military conflict, instead stating that structural conditions historically associated with major power transitions are present.

Crypto Markets Face Complex Outlook

Dalio’s comments have implications for digital assets. Periods marked by sanctions, asset freezes, and restrictions on cross-border finance have historically increased interest in alternative settlement systems operating outside traditional banking infrastructure.

Bitcoin is frequently described as resistant to censorship and capital controls, characteristics that may draw attention if financial fragmentation accelerates. However, cryptocurrencies remain sensitive to global liquidity and investor risk appetite.

Analyst Ted Pillows said rising geopolitical risks could bring higher volatility and sharper price swings across markets. While weakening trust in traditional monetary systems could support long-term interest in crypto, near-term stress may pressure valuations.

Recent months have also shown divergence between gold and digital assets. Precious metals reached record highs amid geopolitical uncertainty, while cryptocurrencies struggled following tariff-driven market declines. 

Related: Retail Crypto Traders Reduced Risk Early During December Volatility