Would A Recession Be Bullish Or Bearish For Bitcoin?

Macro strategist Luke Gromen has outlined a dire outlook for the U.S. economy, highlighting the impact a recession would have on Bitcoin BTC/USD.

What Happened: In a podcast episode of ‘What Bitcoin Did’ published on Monday, Gromen stated that the inflection point would come when capital outflows, rising inflation, and unsustainable debt levels trigger an emerging market-style "sudden stop" crisis in the U.S.

This would dramatically benefit Bitcoin as a neutral reserve asset.

He highlighted the alarming fiscal situation, where "U.S. interest plus entitlements is more than 100% of receipts," despite tax revenues being at all-time highs.

This fundamental imbalance, he argues, makes traditional austerity measures impossible without triggering a severe recession that would only worsen the deficit.

Bitcoin's Decoupling

Gromen predicts Bitcoin will diverge from the Nasdaq later in 2025 as capital flows shift.

The divergence will be in a more pronounced manner, he stated, and it will need to find new destinations.

“I think it starts going into Bitcoin… that’ll be a really interesting moment when you start seeing not just some outperformance but a literal divergence,” Gromen said.

Gromen is intrigued by the idea of U.S. Treasury bonds partially backed by Bitcoin.

"If the U.S. issued debt with even 5% of the face value backed by Bitcoin, I'd buy that," he noted.

Such a move would bolster Bitcoin demand while reshaping the global financial system.

Also Read: Bitcoin Could Replace Tesla In ‘Magnificent 7’ To Boost Returns, Reduce Volatility: Standard Chartered

What's Next: Gromen sees a major financial "moment of terror" triggering a monetary reset, similar to the pre-1971 gold-backed system.

In this paradigm, Bitcoin could function as a neutral reserve asset, co-existing with the U.S. dollar.

“All roads lead to basically some sort of crisis driving the full reserving of the debt market,” he concluded, suggesting Bitcoin is positioned as the ideal solution for preserving wealth during this transition.

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