tl;dr
Macro analyst Luke Gromen highlights the rise of Bitcoin treasury companies as a response to the US government's ongoing dollar devaluation. He outlines a cycle where financial bubbles have shifted from stocks to banks to housing, finally concentrating risk in the Treasury market. The government fac...
Macro guru Luke Gromen highlights the surge of Bitcoin (BTC) treasury companies as a natural response to the US government’s persistent devaluation of the dollar. According to Gromen, investors are navigating a massive financial bubble that has been successively transferred through the stock, banking, and housing markets before ultimately settling in the Treasury market.
Gromen explains that the US government faces a stark choice: either confront a default or a severe depression to realign its fiscal health or devalue its debt through inflation to sustain the bubble. Recognizing this, many corporate entities are leveraging Bitcoin’s fixed supply cap to create shareholder value, viewing it as a hedge against inflationary pressures.
He traces the buildup of the current economic scenario, recounting how an equity bubble burst, pushing the risk into banks and housing, which then created another bubble. This cycle culminated in the Treasury market being the final backstop, effectively transferring credit risk there. However, unlike other credit instruments, Treasury bonds carry no credit risk because the government can print money to service its debt, leaving investors exposed solely to inflation risk.
Gromen suggests that Bitcoin treasury companies' rise aligns logically with this trajectory, as market participants increasingly accept that the resolution involves substantial devaluation of US and Western sovereign debt. Consequently, he anticipates that credit spreads may remain relatively tight, proposing that investors might favor corporate bonds like Apple or Microsoft over US Treasury bonds, given these circumstances.
At the time of Gromen’s commentary, the US national debt stands at an eye-watering $37 trillion, underscoring the scale of the fiscal challenges ahead.