Bitcoin Could Gain as Gold Replaces US Treasuries

Macro analyst Luke Gromen has proposed that Bitcoin (BTC) could see a substantial boost if gold becomes the primary settlement asset, potentially replacing US Treasuries. In a recent video update, Gromen suggested that if the current administration is serious about reshoring American manufacturing, the US would need to decrease the export of dollars and Treasuries. This change could open the door for gold to become the dominant settlement asset, a transition that Gromen believes has already commenced.

A settlement asset is a financial instrument used by central banks and governments to settle trades or monetary obligations. Gromen posits that if gold assumes this role, investors might begin to see Bitcoin as a dependable alternative. He elaborated that the US is confronted with a dilemma: it can either persist in exporting financial assets or prioritize domestic manufacturing, which would require a shift in the post-1971 US dollar reserve status structure. By transitioning the settlement asset from Treasuries to a neutral reserve asset like gold, the US could resolve this dilemma.

Gromen observed that the Trump administration's decision not to impose tariffs on gold, despite levying tariffs on nearly everything else, signals a strategic effort to channel capital towards gold. This move could weaken the dollar but fortify the overall dollar system by making it more gold-backed. Gromen anticipates that this shift could benefit Bitcoin over time, as investors look for alternatives to conventional financial instruments.

The concept Gromen references is known as Triffin’s Dilemma, a paradox identified by economist Robert Triffin. This dilemma underscores the challenge the US faces in maintaining trade deficits to supply the world with USD while keeping inflation and currency confidence at reasonable levels. Gromen's analysis indicates that by adopting gold as a settlement asset, the US could navigate this dilemma more effectively, potentially benefiting Bitcoin in the process.