3 - 4 minute read
The US authorities may be coordinating an effort to suppress the price of Bitcoin as they prepare for the possibility of hyperinflation. Macro investor Luke Gromen, founder of investment research firm Forest for the Trees, believes that the US government is attempting to control the price of Bitcoin and gold to prevent the erosion of confidence in its economic policies.
Gromen suggests that if the stock market goes up significantly, people will be less likely to question the government’s economic policies. However, if Bitcoin or gold prices rise rapidly, it could raise concerns and questions about the government’s management of the economy.
There are claims that the US authorities may attempt to curtail the use of cryptocurrencies in a coordinated attack on digital currencies, known as “Choke Point 2.0”. This refers to a series of unreasonable regulatory enforcement actions on the space. Gromen believes the US authorities are attempting to control Bitcoin prices before hyperinflation takes place.
Gromen emphasized the government’s need to inflate away and delay any such possibility. Continuing to deflate would lead to an increased probability that the government would need to experience a compressed period of high inflation. There is an inevitability of where policy is going, which is a compressed period of high rates of inflation, similar to the inflationary period in the 1970s.
Gromen suggested that Choke Point 2.0 may look like a capital control of an asset class that certain elements of the government would not want going up as a result of what they’re doing or what they’re going to do. He warns that if inflation rates increase, asset-backed currencies such as gold and Bitcoin could become increasingly valuable, exposing the government’s actions.
It is unclear whether the US authorities will effectively control the price of Bitcoin or other cryptocurrencies. The rise in Bitcoin and other cryptocurrencies is often driven by market forces and can be difficult to regulate. However, Gromen’s insights on the macro-economic environment raise important concerns about the government’s policies and potential risks for investors.
The Bottom Line
The US government may be attempting to suppress the price of Bitcoin and gold ahead of possible hyperinflation. Traders should pay close attention to any changes in the regulatory environment and monitor inflation rates, which could present opportunities or risks in the market.