Macro strategist Luke Gromen unpacks how developments in the energy market could directly impact Bitcoin (BTC).
In a new thread on the social media platform X, Gromen tells his 340,800 followers that he thinks gold and Bitcoin are poised to surge if energy prices spike.
“1. Whenever physical [gold] is revalued to a big multiple of oil, energy prices in fiat will skyrocket, sending gold far higher on fiat.
2. When energy prices in fiat skyrocket, the price of BTC will also skyrocket in fiat.
And the stock-to-flow ratio of BTC is way higher than gold.”
When asked about the connection between oil and BTC, the macro expert explains that surging energy prices fuel inflation, which in turn puts pressure on the bond market.
“Because the bond market will need to be capped with printed money to prevent the inflation driven by a rise in energy prices from collapsing it…
Rising energy prices beyond a point will break bonds.
Once that happens, either money will have to be printed to cap yields to maintain government solvency, or sovereign debt will nominally get restructured.
Assets with no counterparties should outperform (gold, BTC).”
When inflation is on the up and up, bond investors demand higher yields (returns) to make up for the loss in purchasing power. Bonds locked into lower yields typically witness a drop in value as investors rush out of assets that offer little to no real returns, triggering a bond market collapse. Gromen thinks that the Fed will be forced to buy bonds with printed money to prevent a collapse, creating favorable conditions for Bitcoin and gold.
Gromen also notes that at the most fundamental level, Bitcoin is a product of the energy market as miners rely on massive amounts of electricity to mine BTC.
“Electricity used to support BTC and its price is very real, enough to power much of the US continent.”
At time of writing, Bitcoin is worth $106,401.
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