Asset Revaluation in the Deflationary Era: How Macro Analysts Adjust Bitcoin Holdings

In a time when inflation expectations are reshaping market dynamics, macro analyst Luke Gromen’s recent strategic decision has sparked widespread market discussion—he has phased out the majority of his Bitcoin holdings by the end of the year. This is not a complete liquidation but a tactical adjustment based on a profound judgment of changing macro conditions. His core logic involves a re-evaluation of the global economic system and a new understanding of asset performance in an inflationary environment.

From Financial Asset Dominance to Reality-Based Constraints

The clear winners in the financial markets over the past thirty-plus years have been: the bond market, Wall Street, and financial asset holders. Meanwhile, manufacturing, industrial capacity, and the working class have been long under pressure. This period is often called the “Financial Prioritization” era, where financial asset appreciation enjoyed the most favorable policy environment.

But this pattern is quietly changing. As geopolitical competition intensifies, supply chain security becomes a hard constraint, and industrial fundamentals are being re-emphasized, government policy objectives are being forced to adjust. We are moving away from a “Financial Prioritization” world into an era of “Reassertion of Real Politics.” In this new world, national competition, industrial capacity, and the real economy are being reactivated, which means the logic of financial asset appreciation is being re-priced.

Equity Layer Crisis Driven by Inflation

To understand Luke’s decision, it’s essential to revisit his redefinition of Bitcoin’s role. For a long time, he viewed Bitcoin as a “liquidity smoke detector,” the most sensitive risk indicator within the financial system. This judgment has been repeatedly validated over recent years.

However, he openly admits that his assessment of Bitcoin’s performance in an inflationary environment was off. When inflation truly arrives, Bitcoin’s trading characteristics resemble a high-beta tech stock rather than a neutral reserve asset. This shift in understanding stems from a new perspective on the architecture of the modern economy.

Today’s global economy is a highly leveraged system, where all assets can be understood through a “capital structure.” Under this framework, when liquidity is abundant and asset prices rise, the bottom layer of capital structure—the “equity layer”—experiences the strongest gains; conversely, when inflation takes hold, the equity layer is the first and most severely impacted. During the 2008 financial crisis, the equity layers of CDOs and CLOs disappeared in this manner.

Luke is increasingly convinced that, in the current economic system, Bitcoin is playing the role of the “equity layer.” This is not a devaluation but a realistic assessment of its structural position. In an inflationary environment, this layer faces the greatest pressure.

AI-Driven Inflation: A New Kind of Recession Driver

What prompted Luke to reevaluate his investment order is the “exponential” efficiency boost brought by AI and robotics. This round of inflation has three distinct features:

First, it stems from technological efficiency innovations rather than traditional demand cycle downturns. Second, it is substantially impacting the labor market, especially the employment prospects of young people. Third, the spread of this impact is unusually rapid.

In such an environment, any policy measures below the level of “large-scale monetary intervention” effectively tighten the economy. During tightening cycles, the assets most vulnerable are the equity layer assets. This is the core reason Luke has become cautious on Bitcoin in the short term and has sold most of his holdings.

When Will Inflation Trigger a Policy Shift?

Luke does not dismiss Bitcoin’s long-term value. He still believes that inflation will eventually evolve into a crisis, likely forcing policymakers to undertake large-scale monetary responses. But his new view is that this step won’t come so quickly.

He openly admits that he previously overestimated the speed of policy responses. He thought policymakers would act sooner, but evidence shows otherwise, and he no longer expects a rapid change in direction. Therefore, this becomes a “sequence issue”: before policy truly shifts and before large-scale monetary intervention occurs, he prefers to retreat from the most fragile points in the capital structure, waiting for market prices to more fully reflect reality, then look for opportunities to re-enter.

This judgment may be mistaken; he admits he might be “overly precise” in his calculations, but it is his most honest current stance.

Why Silver Became an Alternative Choice

While selling most of his Bitcoin holdings, Luke has increased his focus on silver. This is not an emotional decision but a structural investment choice based on analysis.

He observes that industrial demand for silver continues to rise, but supply-side capacity cannot expand rapidly. Even if prices increase, it’s difficult to generate quick supply responses. Under this supply-demand imbalance, silver’s investment logic is more straightforward and simple. Unless a deep recession destroys demand, this supply bottleneck will persist long-term. And if a deep recession occurs, the economic system may revert more quickly to a “crisis—massive money printing” path. From this perspective, silver’s logic is better suited to the current inflationary environment.

Investment Wisdom in a Deflationary Era

The core message Luke wants to convey is that true long-term investing does not mean always being fully invested. Sometimes, the smartest decision is knowing when to step back, maintain clarity of judgment, and avoid being forced into irreversible choices at the wrong time.

As inflation expectations redefine the market landscape, every investor needs to rethink asset allocation logic. Financial assets no longer enjoy the “tailwind” they once did; the importance of the real economy and industrial fundamentals is being re-emphasized. During this transitional period, understanding how to pause, wait, and preserve judgment may be wiser than always being fully invested with an aggressive stance.