Bitcoin Revaluation Under Deflationary Expectations: A Macroeconomic Shift from an Equity Perspective

By the end of 2025, renowned macro analyst Luke Gromen made a decision that drew market attention—he reduced most of his Bitcoin holdings during this period. This is not a complete liquidation but a phased adjustment supported by clear logic. His core judgment touches on deeper economic structural issues: in the face of increasing deflationary pressures, why might the former safe-haven assets be the first to be hit?

The answer to this question requires us to re-examine the fundamental shifts happening in the macro environment.

From Financial Primacy to a Return to Real Politics

Over the past three decades, a clear winner sequence has gradually taken shape in the global economic landscape: the bond market, Wall Street, and financial asset holders have risen steadily, while manufacturing, industrial capacity, and grassroots employment have been under long-term pressure. This is an era of “financial primacy.”

But starting in 2025, this pattern is being forced to adjust. Geopolitical competition intensifies, supply chain security becomes more critical, and industrial infrastructure turns into a strategic hard constraint—these forces are rewriting policy objective functions. We are no longer living in a world where “financial assets naturally trend upward,” but entering a new phase of “return to real politics.”

The implications of this shift are far more complex than they appear on the surface. It will not lead to a comfortable world of low interest rates and a weak dollar; instead, it may usher in a more unstable, frictional, and “real” environment—yet also more severe.

Fragility at the Equity Layer: Capital Structure Dilemmas in a Deflationary Environment

Luke’s logic for reducing holdings approaches from an often-overlooked perspective: understanding various assets within a “capital structure” framework.

In this framework, capital structure is divided from bottom to top into debt layer, preferred equity layer, and common equity layer. When liquidity is abundant and assets are rising, the common equity layer experiences the largest gains; however, when deflationary pressures emerge, the common equity layer is often the first—and most severely—hit. The risk events of 2008 involving CDOs and CLOs are vivid lessons of this logic.

The key question is: in the current global economic system, Bitcoin precisely plays the role of the “equity layer.” This is not a devaluation but an honest description of its true position within the financial structure. When deflation truly arrives, Bitcoin’s trading behavior will resemble that of a high-beta tech stock rather than a traditional “neutral reserve asset.”

Luke openly admits that his previous judgment on Bitcoin’s performance in a deflationary environment was mistaken. Reality is now correcting that perception.

AI-Driven Exponential Deflation: Accelerating a New Kind of Recession

The catalyst prompting Luke to reassess the timeline is the “exponential” efficiency gains brought by AI and robotics technology.

What makes this round of deflation unique is its driving force: not a traditional demand cycle slowdown, but a technological efficiency revolution. The infiltration of AI systems and automation machinery is rapidly destroying jobs, especially among young workers. This diffusion is happening at a pace far exceeding similar scenarios in history.

In such an environment, any policy response below a “nuclear-level money printing” is effectively tightening. And during economic tightening, the assets most vulnerable are still those at the equity layer. This is the core reason Luke has adopted a more cautious stance on Bitcoin in the short term.

Revising the Timing: Why Policy Responses Won’t Be So Fast

What further solidifies this view is Luke’s adjustment of expectations regarding the speed of policy responses.

He admits he previously overestimated how quickly governments would act. While he still believes deflation will eventually trigger a crisis and force large-scale monetary responses, the timeline for this process is longer than expected. This means that before a truly “nuclear” policy response occurs, equity assets may need to endure a longer period of pressure.

Therefore, Luke’s strategy becomes a matter of sequence: before policies truly shift, first exit the most fragile layer of the capital structure, wait for prices to more fully reflect reality, and then look for opportunities to re-enter. This is a “step back” approach aimed at maintaining clarity of judgment before the wrong timing arrives.

The Structural Logic of Silver: Why It Becomes the New Focus

Contrasting with his cautious stance on Bitcoin, Luke is actually more optimistic about silver. But this is not driven by emotion; it is rooted in supply-demand structural analysis.

Industrial demand continues to rise, but supply-side expansion is almost impossible to accelerate quickly—even if prices increase, effective supply responses are unlikely. Only a deep recession that destroys demand itself could change this, but in that case, the world might fall into an even faster “crisis—money printing” cycle. From this perspective, silver’s logic is more direct, more straightforward, and better suited to the new macro environment.

The True Meaning of Long-Term Investing

Behind this shift in perspective lies a frequently overlooked investment wisdom: long-term investing does not always mean staying fully in the market.

Sometimes, true long-term vision requires a “step back”—knowing when to temporarily exit, when to stay observant, and avoiding irreversible decisions driven by short-term volatility. Luke’s approach exemplifies this wisdom.

While not all these judgments may be proven correct, they point to a larger signal: the familiar macro environment is quietly changing, and sensitivity to these changes and timely adjustments are the key differentiators for long-term investment success.