Financial chaos scenario: dollar weakens, gold and Bitcoin surge
Veteran macro investor Luke Gromen asserts that gold and BTC could continue to rise sharply if the US implements capital control measures to maintain an edge in the trade war.
In a recent interview, he warned that the credibility of the dollar as a global reserve currency could be shaken, leading to a capital shift towards gold and Bitcoin in search of safe havens.
The Fed may be forced to 'pivot' after a short-term shock
Gromen envisions a chain of events: when the US tightens capital flows, the market will react negatively immediately — stocks, bonds, and the dollar will all plummet, creating a wave of panic within days.
However, this chaos will force the Federal Reserve (Fed) or the US Treasury to intervene, thereby pushing gold and Bitcoin prices soaring even further, leading to a recovery in the stock market.
Gold will replace the reserve role, Bitcoin will benefit accordingly
Theo Gromen, in this scenario, the US dollar will gradually lose its reserve role, making way for gold, as Europe cannot access dollars, China does not want to hold them, and other large bond markets like the UK, Japan, or the EU are not strong enough to replace it.
'Gold will moon, and this is actually beneficial for the US in the long run,' he said.
In that context, $BTC
will also benefit similarly as a form of decentralized asset with great potential.