Macro Analyst Rethinks Bitcoin: The Case for Caution in a Deflationary Boom

Luke Gromen’s Portfolio Shift Signals Deeper Concerns About Risk Assets in 2025

When macro analyst Luke Gromen trimmed his Bitcoin holdings significantly in late 2025, it was not panic selling. It was a strategic retreat—a deliberate decision to reallocate away from what he now views as the most vulnerable layer of an overleveraged financial system. His reasoning cuts deeper than price action or sentiment. It is about understanding how asset classes behave when deflation, powered by AI and automation, begins to suppress the entire capital structure.

The AI Deflationary Shock: Why Traditional Hedges May Fail

For years, Luke maintained faith in Bitcoin as a “liquidity smoke detector”—an early warning system for financial stress. That thesis held up during conventional cycles. But 2025 introduced a new variable: exponential deflationary pressure not from demand collapse, but from technology itself.

When AI and robotics create genuine productivity gains, they do not just slow inflation. They compress margins, reduce labor demand, and force the system into a new kind of tightening—one where traditional money printing may not arrive as quickly as past crises suggested.

The deflation unfolding now has three hallmarks:

• It stems from structural efficiency, not cyclical weakness
• It is hitting employment hard, particularly younger workers facing automation
• It spreads at unprecedented speed

In this environment, any policy response short of extraordinary monetary intervention acts as a deflationary drag. And that is the crucial shift: for the first time in decades, passive holding may not be enough. Timing and positioning matter enormously.

Why Bitcoin Becomes a “High Beta” Asset in Deflation

Here lies the uncomfortable truth Luke is articulating: Bitcoin does not function as a neutral reserve asset when deflation arrives. It behaves like a high-beta tech stock—volatile, leveraged to growth expectations, and vulnerable when those expectations compress.

The reason is structural. The global financial system is not a simple marketplace; it is a layered capital structure. At the bottom sits the equity layer—the riskiest tranche that absorbs losses first. Above it sit bonds and senior debt, which lose value only after equity is wiped out.

When asset prices are rising and credit flows freely, equity returns dominate. But when deflation forces deleveraging, equity layers get crushed first. This happened to CDOs and CLOs in 2008. And Luke increasingly sees Bitcoin occupying that equity-layer position in today’s system—not a flaw in the asset, but a realistic assessment of its structural role.

The implication is stark: in a deflationary squeeze, Bitcoin would likely trade like the riskiest financial asset, not a safe haven.

A Shift in Sequence, Not Long-Term Conviction

Luke emphasizes repeatedly: this is not a reversal on Bitcoin’s long-term prospects. It is a recalibration of timing. He believes deflation will eventually trigger a crisis severe enough to force massive policy response. When “nuclear-level” monetary intervention arrives, Bitcoin’s fundamental case returns.

But the key word is eventually. He now believes the lag between deflationary pressure and policy response will be longer than previously estimated. Governments are slower to act than crisis cycles suggest they should be. The policy pivot will come, but not imminently.

So the decision becomes tactical: step aside from the most vulnerable risk layer, let prices reflect reality more accurately, and re-enter when the inflection point is closer. It may turn out to be mistaken timing. But it is an honest reassessment based on observable conditions, not emotional capitulation.

Why Silver Tells a Different Story

If Bitcoin faces structural headwinds in a deflationary cycle, silver presents a contrasting thesis. The metal is experiencing rising industrial demand while supply cannot easily scale. Even if prices climb, productive capacity cannot respond quickly enough to create new supply—unless demand is destroyed by severe recession.

This creates a powerful asymmetry: silver prices rising in an industrial cycle, or accelerating upward when recession forces monetary response. Either way, the directional logic is tighter and more resilient than Bitcoin’s during a prolonged deflationary phase.

The Bigger Picture: “Realpolitik” Returning

What Luke wants investors to understand goes beyond Bitcoin or silver preferences. It represents a fundamental regime shift in how the world economy will operate.

For thirty years, financial assets won reliably. The bond market won. Wall Street won. Equity holders prospered. Meanwhile, manufacturing capacity and working-class wages stagnated. The system was optimized for financial returns, not production capacity.

That era is ending. National competition, supply chain resilience, and industrial foundations are now hard constraints on policy. The objective function is changing. The world ahead will be less “elegant,” more frictional, more unstable—but also more real and more oriented toward actual production rather than financial engineering.

In such a world, passive allocation to traditional financial assets becomes riskier, not safer. The old playbook of “buy and hold financial assets” assumes the policy regime that made that work will persist indefinitely. Luke is signaling that assumption may no longer hold.

The Investor’s Dilemma: Always In or Always Thinking?

Perhaps the most overlooked aspect of long-term investing is this: being long-term does not mean being invested at every moment. Sometimes the sharpest long-term thinking involves stepping back, reassessing, and waiting for more favorable entry points or clearer signals.

Luke is not abandoning Bitcoin or dismissing its eventual significance. He is choosing to derisked his exposure before deflation forces that derisking upon him. Whether this timing proves prescient or premature remains uncertain. What is clear is the logic: understand the structural position you occupy in the capital stack, and do not assume past patterns will repeat indefinitely.

The macro environment is shifting. Assets that thrived in one regime may struggle in another. The question for investors is whether they will adapt their positioning accordingly, or hold conviction through the transition regardless of changing conditions.