Macro investor Luke Gromen is naming one pivotal moment that could send both gold and Bitcoin (BTC) flying.
In a recent interview on Blockworks Macro, Gromen says that he believes Bitcoin and gold will win “either way in the end.”
According to the investment strategist, Bitcoin and gold will likely turn bullish the moment the market sniffs out that the US government is 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’s nothing more bullish for gold and for Bitcoin than the moment when markets go, ‘Oh my God, they can’t raise rates more because the only way to pay the interest is if the Fed prints it.’
Obviously, the US government is not going to go nominally bankrupt. The Federal Reserve will print the difference or the US government… But that moment when the market goes, ‘Oh my God, inflation hasn’t come down. They’ve raised rates a bunch. They need to raise them more, but from here the only way to make the interest payments are by printing the money.’”
On the off chance that the Fed continues with its tight monetary policies, Gromen says that gold and Bitcoin will likely take a hit in the short term. However, he argues that the rising national debt will eventually force the Fed to reverse its stance, which would be bullish for both store-of-value assets.
“However, if the Fed does not print the money, then as paradoxically given the dollar’s incumbent role as (the) reserve currency and the dollar borrowings out there, the US government is going to crowd out global dollar markets…
And the dollar will go up, and that can put some pressure on gold and Bitcoin in the short run, but ultimately, from there, the distance point is, ‘Okay, the Fed does not print it enough, and the US government heads towards default,’ and you will get to a moment where markets go, ‘Oh gosh, they could actually default.’
And that ain’t bad for gold and Bitcoin in my view.”
I
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