Macro investor Luke Gromen cites a pivotal moment that could send both gold and Bitcoin (BTC) flying.
In a recent interview on Blockworks Macro, Gromen says he believes Bitcoin and gold will win “in the end anyway”.
According to the investment strategist, Bitcoin and gold are likely to turn bullish once the market senses the US government gearing up to print more dollars to fund its national debt.
“If the Fed (Federal Reserve) raises rates too much, they will bankrupt the United States government, and there is nothing more bullish for gold and for Bitcoin than when the markets say, ‘Oh my God, they can no longer raise interest rates.’ because the only way to pay the interest is if the Fed prints it.”
Clearly, the US government is not going nominally bankrupt. The Federal Reserve will squeeze the difference or the US government… But that moment when the market says, ‘Oh my god, inflation hasn’t come down. They have raised the rates significantly. They have to raise them more, but from here the only way to make the interest payments is to print the money.’”
If the Fed continues with its tight monetary policy, Gromen says gold and Bitcoin are likely to take a hit in the near term. However, he argues that rising national debt will eventually force the Fed to revise its stance, which would be bullish for both stores of value assets.
“However, if the Fed doesn’t print the money, then given the dollar’s role as[the]reserve currency and the dollar lending out there, the US government will paradoxically crowd out global dollar markets…
And the dollar will rise, and that may put some pressure on gold and Bitcoin in the short term, but ultimately, from there, the point of distance is, ‘Okay, the Fed isn’t pushing it enough, and the US government is moving towards default ‘, and you get to a point where the markets go, ‘Oh god, they could actually default.’
And I don’t think that’s bad for gold and Bitcoin.”
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