What Bitcoin Did - Iran, Oil and the Next Financial Crisis | Luke Gromen

Episode Date: March 10, 2026

"Our entire financial system will blow up without their factories, without their oil. And they know that. So they can wait." Luke Gromen is a macroeconomic analyst, investor and founder of FFTT. In this episode, we get into whether the Iran war exposed a far bigger geopolitical shift than most people realise, why Luke thinks missiles and drones may have changed global power forever, and what all of this means for oil, markets, Bitcoin and the future of the dollar system. We also get into why Bitcoin held up better than expected during the conflict, why Luke still thinks risk assets face serious danger ahead, and how AI could trigger a major credit event faster than almost anyone expects. THANKS TO OUR SPONSORS: ANCHORWATCH BLOCKWARE LEDN BITKEY SWAN CLUB ORANGE FOLLOW: Danny Knowles: https://x.com/_DannyKnowles or https://primal.net/danny Luke Gromen: https://x.com/LukeGromen

Everyone's lined up for the comfortable lie. No one wants to get in the line of the inconvenient truth. Would he start launching nukes? What happens next? People were paying $350,000 for a jet ride out of the Middle East. You're in the UAE and you need to get your money out of UAE as fast as you can. I buy some Bitcoin. Bitcoin was going up as things were getting worse in the Middle East.

Normally, Bitcoin is fully risk-on. And in this case, it was actually acting as risk-off. This is going to go really fast. You know, it moves, you know, connect up a couple computers. Boom, gone. GTFO. Like, game over. See you later.

People aren't going to pay their mortgages and their car loans and credit card bills. And then those things are going to blow up something in private credit. And private credit's going to have an issue. And then the banks are going to pull back on lending. And any kind of recession will force us into default on the treasuries or entitlements or print the money. And they'll print the money. I don't know how they're going to get there. To me, the only debate is this, like,

how fast. Luke Groman, great to see you, mate. How are you? Well, Danny, how are you? I am really good, thank you. I was just talking to you before we started recording. It's 6 a.m. here in Australia, and I was like, what did I miss, Luke? And you said, well, the wall's over.

So, fill us in. What's happened while I've been asleep? Well, as you were going to bed, you probably saw oil at 119. It finished. It is now at 84 again. It basically went straight downhill after they came in this morning. There was a rumor of a G, well, not a rumor, a report that G7 was going to get together and sell their oil out of their SPR to get oil down. Then they said, well, we're not actually doing that. We've seen more news of refineries shutting down. I think I saw the Saudis. There was news last night of the U.S. evacuating its embassy in Saudi Arabia. There was news earlier today, potential. I am not sure if this was confirmed. The U.S. consulate was evacuated in Adana Turkey.

This afternoon, Israel came out and said there was a report in Washington Post, essentially that Israeli officials were beginning to, quote, unquote, get concerned, understandably so with Tel Aviv getting hit last night and the lights getting apparently turned off as the reports that I saw. We had what was the next thing right? Oh, we had Senator Warmonger from South Carolina. What's his name? I can't think of it. At any rate, this guy has like literally been dreaming.

about bombing Iran since he was in the crib. And at any rate, he came out today and said, uh-oh, the Saudis are not supporting us. Maybe we should like slow this down a little bit. What's going on here? And Senator Graham, Lindsey Graham, that's his name, not Senator Warmonger. Translates, actually, in South Carolina, and Senator Lindsey Graham translates to warmonger. Anyway, I'm being more overtly political than I usually am. I should stop it. is only because I think it strategically was a very big mistake. At any rate, shortly thereafter the Iranians came out and said every missile we fire from now on is going to be more than one-ton warhead, which, you know, I tweeted at the time's

a big geopolitical poker call, right, call and raise, which is we've been saying we have plenty of air defense missiles left. The Israelis have been saying same and have been, we've both been saying the Iranians are going to run out soon. And the Iranians are like, we can keep doing this for a while. fine. And we were about to find out. And literally probably about 20 minutes after that headline hit, and about an hour or so after the Israeli Washington Post headlines hit, we have a CBS report citing Trump that he's saying basically the war's over, that, you know, we've destroyed their Navy

and we've done, we've largely disrupted their, we've largely, or no, we've destroyed their ability to shoot missiles. Now, literally. early 20 minutes after he said that, Iran began getting hit or began, Israel began reporting, getting hit by more missiles overnight. Yeah, it's getting to be nighttime there now. So, it is nighttime there now. So markets are rallying. Oil is down a bunch. It's been like a giant seesaw up and down across most markets today. And I feel like that's a day of my life. I'll never get back. Who's been the winner out of this situation?

Because I think Trump expected to go in this to be over very quickly and maybe didn't expect the pushback from Iran that they got. And like Iran have been on the offensive in a way that like I don't know if anyone imagined. I think we have done a lot of damage to Iran. I think Israel's done a lot of damage to Iran. I think Israel was is, is, was is staring down the prospect of Tel Aviv being turned into something that looks like Gaza, which is to say flattened. I think, forget about what I think. I know Iran was much more effective than our planners thought. Why they thought that, I don't know, we're supposed to have superior intelligence. I think our war planners were telling our civilian

leadership exactly that. There were hints of that two weeks ago when chairman joined chiefs of Staff Kane, General Kane came out and was quoted in at least four of the most important media around Washington and New York City in the Beltway saying, we don't have the weapons to do this, essentially, effectively distancing himself from this, putting it all on Trump. And in the ensuing two weeks, it hasn't gone nearly as well as advertised, which I, again, I know for a fact. I'm not guessing at that based on what I'm hearing. And so it definitely destroyed a lot of stuff on the ground for Iran.

Israel got bloodied up. The Iran Navy, not that that was ever really a threat, was definitely a big W for us and an L for them. now what did iran and the war if this really is the end of the war i would probably gun to my head at best chalk it up to a strategic draw and possibly a you know you're you're a former fighter right i would probably give it i would probably from a strategic standpoint it probably be a you know i don't know, one one, one with, I mean, yeah, a literal draw, right? I'm not a big boxing or fighting guy.

So, but, but, and the reason I say that is they got him to taco again. They got him to taco again. Oil goes to 100 and he panics as he has to panic because he doesn't have, you know, a year ago with Liberation Day, we said that the bond market were his broken ribs, where the U.S. is broken ribs. And a fighter, who knows the other fighter's ribs are broken, is going to beat on those dribs until they're on the canvas. And the U.S. can't abide a $100 oil. They can't. The bond market can't and stock market can't. And we just saw that. And so that was a big tell. But I think even

bigger than that, because I don't think that's necessarily a shock to anybody is, A, is, I hear very credible rumblings that the United States strategic radars. And New York Times wrote about this, not quite in this doubt, but that our strategic radars were heavily damaged or destroyed. around golf. And there's a lot of people that as a couple hours ago were saying, we need to keep doing this. We're doing this to really put the squeeze on China. Those same writers were not talking about, you know, how do we rebuild strategic radars

without Chinese rare earths? And if the Chinese might be slightly reticent to sell those rare earths to rebuild our strategic radars. And I think bigger picture, if there's been a lot of people sort of. bragging about how we're running a protection racket essentially, which we kind of are, right? You know, some of the, you know, hashtag Merica crowd, you know, hey, we've got the world's best military and we run a protection racket and there's nothing they can do about it. Yes, and when you run a protection racket and then you don't protect, that starts raising

very uncomfortable questions amongst the protectees. And what they start to say is, you know what, we're going to invest in our our own protection. Well, we needed those dollars flowing into our treasuries, markets, AI, etc. And so that's kind of a TBD to be determined outcome to it. So, you know, it's kind of like we, we definitely got a, you know, a victory from the standpoint of look, there's a bunch of stuff burning and the leaders are dead. And, you know, it's, you know, I saw what mean. So, you know, Look, it's a victory. It took us 21 years to remove the Taliban and replace, you know, take Afghanistan from the Taliban and then give it back to the Taliban.

He said, it only took us eight days to take Iran from Khomeini and give it back to a Khomeini. So that was a lot faster. Couldn't help but laugh at that. Like I said, I netted out if this really is the end of the war, it's at best to draw. because if I'm Iran, Iran is going to now work as fast as possible to get nukes, number one. Yeah. And China, knowing that we are going to try to use Iran to cut them off their oil, is going to help them get those nukes as fast as they can,

as will the Russians, because the Russians, it's a bit of an underbelly for the Russians. And we learned that what Eric Prince, former head of Blackwater, said last February was true, which is there's been a revolution in the military affairs. And missiles and drones have made obsolete a lot of existing equipment. And there is a lot that has occurred in the last two weeks to support that view, not least of which is the closing of the Gulf, right? We have the most dominant Navy in the world, and they close the Strait of Hormuz with missiles. and our Navy wouldn't get anywhere near it. And that's sort of the, you know, that line of inconvenient truths and comfortable lies.

And everyone's like a lined up for the comfortable lie. No one wants to get in the line of the inconvenient truth, which is we do have the world's most dominant Navy. There's no question about that. But that world's most dominant Navy wouldn't dare go into the Strait of Hormuz over the last two weeks. Why? And I've heard some very credible rumblings on the ground as to why that is. And that's why I would say, at best case, it's a draw. So, you know, let's see what happens.

It's Trump. You know, this could change, you know, tomorrow. This could change tonight. Who knows? But at any rate, it's been a heck of a day. It's been a heck of a week. In boxing terms, it really has. In boxing terms, this seems like it's not a victory.

It's like someone's got cut and they've stopped the fight. But the thing that I can't quite figure out is what this means. Like, there's so many questions in this. One is that, like, they wanted regime change in Iran. They kind of got that. But have they going to have just brought someone in who's going to hate America even more. He's seen his family liquidated by missiles. Like, what does that do to his psyche?

Like, is this actually over? And if it is, even for now, who's got the upper-handed negotiations? Because if I was the man in charge of Iran, I would be like, we need to ramp up now. Let's actually get nukes. Yeah. I mean, I, I've heard conflicting things on the, the new guy, right? So like, is regime change ostensibly? But it's, you know, father to son. I've heard the son is harder line. I've heard maybe he's not as bright,

as the father. I don't know. That's, you know, one person whose views I respect asserted that. I don't know their grounds for saying that or bases for saying that. I hear, I have another person I respect who says he's, you know, this new leader is respected by the IRGC, right, the Republican Guard or whatever they, they are. And that he was in naval intelligence or military intelligence, which suggests he's not that done. And look, I just think there's, I look at it simplistically, which is I try to put myself in every other person's shoes I ever interact with to understand their motivations.

And if someone killed my father, my wife, and my children with a drone, and then I knew, like, there was overnight, there was a overnight my time, a Iranian general on their state media saying, like, Trump and Netanyahu are now stuck in a Persian Gulf slaughterhouse because they're running air defense missiles and we know it. And in the next three, four days, we're going to pound on them. And so if it's me, I pound on them. And I don't, I think, I don't, I would like to think I'm a better person than that. But I'm, I probably not. I'd have to do some work around that, right?

That's, you know, our good Lord himself. It was probably the only person on earth that isn't going to be saying, oh, wait, he has not a lot of defenses left. Button, button, button, button. And tonight, you know, we'll see. I was getting on, I was seeing some reports. I've not seen anything of more strikes tonight from Iran into Israel. So let's see. But the broader point is, is the other guy gets.

it's a say, right? This is like in a boxing match. You don't get in the middle of the boxing match. Just go, you know, okay, I'm done for now. Oh, I broke my hand. We're good, right? No, you got to keep fighting for, you know, or you got to, or you got to take a knee. You got to go down. So I think it's going to be very interesting to see the next couple days. because if the other side, if Iran doesn't back down, and especially if they really do start hitting Israel more aggressively, then what? Because it's very hard to say, you know,

would Netanyahu, when faced with Israel getting, you know, Tel Aviv getting turned into Gaza, would he start launching nukes? Betting, man, I bet he would. Then what? Do Russia and China get involved then? What happens next? Like, so let's see, but I'm, you know, it is very much, you know, in a state of flux.

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Or would it have been the economics with oil going to, you know, $110 a barrel? I think that is visibly the thing that is causing him to pull back. I think that is the thing that is not visible to most people is what has happened to our radars on the ground, our ability to protect allies in the Gulf. what that is doing to their willingness to host American bases and troops, etc. You know, I've said before in this year a couple different times in both reports and in public appearances, it's really important these days to ask about the dog that doesn't bark, you know, or as Charlie Munger says, invert, invert, invert, always invert, right? Secretary Rubio was on, you know, the idiot box today talking, you know, he literally said,

with our most powerful military in the history of the world, we, you know, we are doing this and we're focusing on now a week ago is regime change. It's not regime change anymore. Now it is getting rid of their ability to shoot missiles and sinking their Navy, which is, in my opinion, de-escalatory anyway. But the reason I would get to go exactly one of the these press conferences, I'd be like, Mr. Secretary, if we have the most powerful military in the history of the world, why don't we just send the Navy into the Strait of Hormuz and open it up? And he'd go, uh, uh, well, uh, and once you look at it from that angle, that I think is the sort of the taco that is, you know, that's, that's the secret sauce on the taco. I think the

overt, you know, the shell and the meat and the cheese and the lettuce is, Yeah, oil's at 100. Treasury market has gone from 3.95 to it was 420 last night. You know, it was back to 410 today. But you have 26 basis points in what was that, six trading days. You get the stock market down. You got gas prices up a ton. You got polls in this country that are very much going against him. And that was sort of the big. think sort of the underpinning of it is it didn't go like they thought it was the Iranians were it was and it's I want to be clear some of this was Iran but I think a bigger part of it is what Eric Prince talked about which is Eric Prince last year said this is the biggest change in

military strategy since stirrups were put on horses 800 years ago like And it allowed Gingas Khan to run roughshot. And what his point was is that missiles and drones have made obsolete trillions of installed equipment of the hegemon. That's the reason we didn't run the Navy into the Strait of Hormuz. That's the reason why, once the missiles started flying, some of our carriers went away from the action deeper into the Indian Ocean, I'm told. Because missiles and drones, the Mahan doctrine has has. has been enforced by Navy. I made a tweet about this the other day,

and a number of people rightfully called me out that I wasn't specific enough. I said that it was 250 years, really 200 plus, with when you add in Britain, of mayhem doctrine has been turned on its head. Naval, you know,

had been you use your Navy to control naval checkpoints, and you control the world. And missiles and drones, which we just saw mean that naval checkpoints turn into kill zones for navies. And so you've had 400 years of world geopolitics defined by Blue Water Navy powers, America, and then unarguably, you know, the Spain, England, Portugal, Spain, England, America, or maybe Spain, Portugal, I forget what the order those two was a long time ago. But you're three, four hundred years that the people who

had the deep blue water navy controlled the world. And I think bigger picture, this tells us that world's over. And if that world's over, enormous, enormous implications, enormous implications. So what are those implications, especially like if we get into the sort of economic side of things. Like, how is this, like, I think the picture has probably changed just in the last few hours with Trump making the announcement that the war might be coming to an end. But like, how are you, what's your read on that, especially like in the early moments of this. If that's true, if it's true that the war's over, the what the, the missile and drone thing is in is, is absolutely. And what it means is it's essentially democratizing of war in the same way that, uh, the internet was democratizing to a whole lots of stuff.

Right. So, you know, in the old days, 20 years ago, 30 years ago, right? A couple of music companies had all the ANR agents and they had all the relationships with the radio stations. And if you were a band, you had to like, you know, play a bunch of shows, get discovered, get signed, go on tour, build an audience, get on the radio, right? All this stuff. And then the internet and iTunes and what have you is just like, now you just got to know how to play. If you play, you can play, you can find an audience and you can become world famous. And you don't need radio stations. You don't need DJs. You don't. don't need A&R guys and those record companies as execs and all of them taking their cut. Gone. And in the same way, the United States Navy could not open the strait of Hormuz. And I think people need to keep saying that over and over until the implication of it hits them. The United States Navy is the record company with the A&R guys and the big expensive stuff. and Iran with missiles and drones, I mean, what does Iran spend on their military relative to us?

I mean, if they spent one one hundredth of what we spend, it might be. Maybe it's one-fifteenth, who knows? I don't know. But it's not a lot. And yet, best case of draw? Okay, then what does that mean for macroeconomics? Multipolarity. You know, we want to trade outside the dollar. Well, we're going to send the Navy to come beat your head and okay send it into the straight of Hormuz you know and you know the chinese are reportedly you know uh john david p goldman reported two years ago that the chinese are can can produce a thousand cruise missile motors a day we reportedly have six thousand tomahawks roughly less now uh six thousand tomahawks in cruise missiles in inventory in total they can make missiles for that

in a week for that many. And so it turns into what are we, you know, if we want to stop de-dollarization, if we want to stop multipolarity, how many times have you heard it? It's too many for me to count, but like, you know, well, ultimately the U.S. military backs the dollar, right? What backs the dollar is we have 13 carrier groups. Yeah. And none of them wanted to go to the Strait of Hormuz because of Iran's drone and missiles, which cost way less than those 13 carrier battle groups. That is, that's every bit the shift in power that Eric Prince talked about. And it was just manifested in the last two weeks. So do you think China are looking at this thinking, well, we're the superpower now then? I think they are looking at not superpowers broadly in the,

in the traditional sense of the word, but I think China understands it is the manufacturing lynchpin. And I think Russia understands and has understood. I think they've understood this for 10 years, certainly last five years, that the world cannot survive without Russia's oil. That was one of the most hilarious things

going into last weekend, right? Which was Scott Besson on Friday night, as oils at 95 and ripping high or into the weekend, he gets on with Larry Kudlow and says, well, we're going to unsanction Russian oil, despite the fact that the Washington Post had just reported that the Russians were helping the Iranians target American assets, despite the fact that Russia is still supporting Ukraine, who's the power guy

in commodities in that case? It's Russia. Yeah, that says a lot. It says a lot. It says all you need to know. And that's the part that these guys, whether they be. Biden or whether they be Trump's administration, they just, they don't get. If Iran, Russia and China, with a little help from India, all stay inside the tent pissing out, you can take Iran's oil offline

and Russia has all the power because now you can't take it. You've got to have Russia running full out. You can take Russia offline and control Iran. But again, if you pick, fight with either of them, you're going to blow up the oil market. When you blow up the oil market, you're going to blow up the treasury market, you're going to blow up the government's ability to fund itself. And so we just kind of ran through this very, very quickly. And so kind of here we are again.

So I don't think they think they're superpowers. I think they know what they are. I think they understand the leverage they have. And I just think that on, I think Putin and she are much more, low time preference than Americans are you know Americans they only want to buy assets if they're going up at that moment and you know they want immediate pushback and they want immediate reaction you know they want it all to be sort of tidied up with a happy ending and the guy gets the girl the kiss from the girl at the end of the half an hour sitcom and Russia and China I think are just happy to sit back and go your entire financial system which is your economy will blow up without our factories, without our oil. And we know that. And so we can wait. If you already self-custody Bitcoin, you know the deal with hardware wallets.

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Do markets shrug this off, or is this going to have a longer-term effect? I think it really depends on what happens in the next couple days. If Iran stopped shooting missiles, then, yeah, I think markets are at. If I wake up tomorrow morning and, like, Tel Aviv's gotten hit again, and Trump's going, you know, please stop shooting the missiles, we've said nicely, I said the war was over, everyone should listen to me. I have the best idea about war. It's the best war. It's the shortest war. Anyway, the, if the Iranians keep hitting the Israelis and if it's especially apparent that they have no intention of letting up, and if the straight or moose stays shut despite

trumping, I've opened the straight of Hormuz. Open says of me, I said it to open. Why are they not opening? I don't understand. If the straight of Hormuz does not open up, in the next couple days, then I, you know, I think you're going to get a relief, right, you got a relief rally today. I think it'll fall through tomorrow. If Iran keeps hitting them and we get towards Wednesday, Thursday, Friday, and it's like, hey, guys, straight over moves is still not flowing. And Trump has said what his piece, you know, set his peace and it hasn't made a difference. And Iran is pounding on Israel.

Then I think you're going to go, I think you'll go and set new lows in stocks. And I think oil will go right back over 100 because at that point, people go, oh, my gosh, this wasn't a draw. This was a strategic loss. This was a Suez moment, 1956 for the United States. And now what? The U.S. has to escalate. Iran's going to escalate. Israel can't really defend itself.

It's sort of, you know, in the turtle position on the canvas. What are we doing here? And so let's see. It's a wishy-washy answer. but that's, I don't know. Yeah, wait and see moe for the next 48 hours, I think. One of the really interesting things in terms of how markets reacted to this war was Bitcoin. So I know you've been sort of bearish Bitcoin for the last few months.

But while this happened, you would normally expect Bitcoin to drop off a cliff with some like geopolitical tension like this. But it was pretty strong. In fact, I think it's even maybe been up across the actual duration of this war. Did that surprise you? it did a little bit and what I think I was watching and it's this is going to be like Schrodinger's

Schrodinger's Bitcoin commentary right especially since the war's over if you look at the days that Bitcoin was really strong some of it was like I noticed a couple things on the days it was very strong over the last two weeks

one was day it was days that NASDAQ was up really strong in software in particular was up very strong. So that's like, okay, well, that's just like dead cat bounce from the, you know, from February. And some of that could be, okay, well, you know, consumer's going to get killed with oil going up. So software doesn't use any oil quick. Oh, software's oversole. Maybe.

The other thing I noticed was it was also up on some days where there were things were getting worse in the Middle East, but were not necessarily reflected in the stock prices in that moment. When I say getting worse based on what I was reading, based on what I was hearing, and I think some of that is very possible. If you're in the UAE and you need to get your money out of UAE as fast as you can, I buy some Bitcoin. And that's why I say some of it is Schrodinger's asset class through this thing, which is normally Bitcoin is fully risk on.

or at least it has been. And in this case, it was actually acting as risk off. Because normally I've been saying, hey, Bitcoin is the last functioning smoke alarm. Watch what Bitcoin does. That's what risk assets are going to do. So far, it's kind of holding again, I guess, on one level. But it was, from a geopolitical standpoint, Bitcoin was going up as things were getting worse in the Middle East, as more radars in the U.S. were getting hit as more drones as haggseth has gone sorry we can't really stop any of these drones

as they're coming in bitcoin was getting bid so i think there was some element of um sort of it's not oil it's not going to get killed by oil software dead cat bounce stuff i think some of it was actually asking acting as risk off um my working thesis had been up until literally like two hours ago, this, you know, the war's not going as well as expected and without a taco risk is way too high. You know, we've gotten our taco. So let's see.

It could be good for Bitcoin. It could be bad for Bitcoin. It depends if we go right back to the AI software is dead mode. Well, then Bitcoin's probably going to hit with that in the short run. And if it's risk back on, maybe, I yeah, it's hard to tough. It is very much but it has been better

than expected and I think that is I think Bitcoiners should be encouraged by that I am not feeling like oh I need to chase this yet but it definitely has done better you just said to me

hey Luke everything you know today you know two weeks ago where's Bitcoin and I would have said probably 55 thousand and it's at whatever 68,000. And so I definitely better than I would have expected some software bounce. But I think some of it really is Middle East capital flight, which I think true bitcoins would tell you good. That's what it's supposed to friggin do, right? Like that's how it's supposed to work. Yeah. I mean, I think as Bitcoin is, we quite often blame the fact that

Bitcoin trades like a risk asset as sort of information asymmetry. Like people are actually don't understand what this asset is. So, like, seeing it trade like this is incredibly promising. Do you think we could be getting close to the point where Bitcoin has matured into something different? Or do you think that still is way too early to say? I think it's probably still too early to say, but it was, I think, really encouraging, right? That, you know, look, people were paying $350,000 for a jet ride out of the Middle East. And you got to get your capital out. like let's be blunt is hey how much more if i want to bring you know 40 million dollars of gold me in the luggage like well it's going to be another versus you know you know can i take this thumb drive

yeah just put it in your pocket right um that is sort of everything it's supposed to be and and it did it so um let's see i i think it's still too early but i i i think it's still too early but i you know, again, I want to acknowledge what I think we just saw, which is, like I said for Bitcoin, is I think very encouraging. Yeah. So when you actually wrote in your letter that you were going to sort of get rid of some Bitcoin, what was your thinking there? Was that around the idea of like four year cycles you thought that it was just going to roll over? I think it was in like the low hundreds that you maybe first said that, which clearly has been a great trade. When you first did that I was like, Luke doesn't know this time's different.

Who knew someone who's been in the markets for 30 years would know better? But like what were you looking at when you first started getting rid of some Bitcoin? Yeah, it was probably. I started getting nervous, probably low hundreds. I sold most of it, call it 95, 96,000, you know, call it 23, 24 ounces of gold, right? What I started watching was that it was, it started off just by it's not acting the way it should, right? like M2 money supply was like this and Bitcoin wasn't reacting. Okay.

That's interesting, but then it's, you know, well, Bitcoin always goes up by an order of magnitude peak to peak against gold cycle to cycle. Except this not. In fact, you know, I was one of them where I pointed out. I was like, Bitcoin's unchanged versus gold over five years. And that had never happened over any other five year period. Okay. And that's kind of one of those things. of like maybe it means something, maybe it doesn't, right?

These, as Bitcoin matures, you're going to see more of these things never, and as Bitcoin gets bigger, this has never happened or this always happens. Those will start breaking down. So that was something that broke down. You know, in the same way that like last cycle, 2022, right, Bitcoin has never traded below a prior cycle. Huh? Didn't 2020.

Didn't mean it was over, but also didn't mean it was a great buy at, you know, 40, you know, 40. I mean, in hindsight, you make the case, it probably was, but you understand what I'm saying. There were better buys to come. And then what I was seeing in sort of the bond markets, right? When I was seeing what in the Japanese bond market, it yields up, yen down. That's emerging market behavior.

And that is in the JGB market, which is just, there's no way you can look at that as a market participant and go, oh, this is going to end up good for Bitcoin. Like that's it's a it's a horror show for risk assets. And so you just kind of go, eh. And then they see the way it's trading. And then, you know, there were legitimate concerns. You know, well, then there were within all of this, right? You were seeing a whole bunch of, you know, OG whales or whatever, just sort of these big long-term holders selling.

And it was holding up, right? Now, initially my reaction was, wow, these big guys are selling and it's not breaking like it used to. That's really encouraging. That was my initial treat. And then it starts breaking. Yeah, so, like, $9 billion a coin. Right. Yeah, yeah, right?

And now, then it started breaking down. Then you started having like a whole slew of who I would say are pro-Bitcoin people raising what to me as a tourist seeming to be relatively valid concerns. around quantum and some of those types of things, which again, I was not like, oh, this is an eminent. And like, the markets are smarter than all of us. And I'm watching Bitcoin trade as all of these things are happening. And the final straw was just, and I wrote this and highlighted for clients before I ever sold. And it was just, you know, two different momentum indicators on a monthly momentum charts. So I don't pay a lot of attention to technicals in the short term because I'm not a trader,

but big sort of capital flow monthly sort of technical moves. I have been doing this 30 years. And when I see them, I have gotten my head kicked in enough to just not grow a brain and just respect them. And I think I said something to that effect. Like I've been doing this long enough when a technical indicator breaks down, you know, if they just kind of, you know, in for a smooth landing and cross, that's like, when they go through like a hot knife through butter, that is like GTFO. Like game over, see you later.

And is it quantum? Is it, is it Japan? Is it war? I don't care. Doesn't matter. Get me out. And I think the last part was just the context of understanding. Like, and I think I may even have been said this to you before, but I've been doing

this 30 years. And Bitcoiners have been doing Bitcoin for three years and know way more than me about to technology and what have you, whenever. But doing this 30 years and advising, when I say doing this, advising institutional investors, consulting with institutional investors for 30 years with the marginal bid, so much of the marginal bid for Bitcoin coming from institutions over the last, however many years and celebrated rightfully so by Bitcoiners. I also knew that chart.

There's like going to be no institutional interest in that chart for some time. Everyone in their mothers is going to go, I'll wait. I'll let it come to me. And that's kind of what they did. And so that was, it was not so much one thing. It was a whole lot of things in the context of me, like, look, Bitcoin was a friggin' enormous position for me personally. It was, you know, irresponsibly large.

And so, you know, having a three to five percent position in something and have it with that chart is a completely different animal than where I was in terms of positioning. I just, you know, I wanted to get, I wanted to de-gross significantly and I did. Yeah, on the quantum side, I, like, I'm no quantum expert, but from people I've spoken to, I think that's mainly a narrative issue rather than anything real right now. Like, I think quantum's still a long way off. And if something does happen, there's people working on ways that we can change Bitcoin to make it quantum resistant. But, like, to make this trade now a genius trade, you obviously, I got to buy back, huh?

You got to buy back. Assuming your long-term thesis on Bitcoin hasn't changed. No, it has. When do you? What do you need to see before you start looking at this again? They need to see more aggressive nuclear printing, if you will. We literally have completely put on the back burner this whole AI thing for the last two weeks. And I think, you know, if this Iran war is over, which is sort of like they've managed to paper over AI concerns.

Like Friday after Friday here in the U.S., we had 92,000 jobs lost. And you're seeing job openings in sort of every sector where you'd expect AI to curtail job openings. You're seeing job openings in free fall in finance. You're seeing them fall in tech. you are seeing them drop in services. And I just keep hearing more and more and seeing more and more signs in that world that this is accelerated in an exponential rate. And if that's the case, then our debt-based system, you know, consumer credit is going to be a giant smoking crater because of AI.

And we can debate if that's in three months or if that's in six months or if that's an 18 months. months, but from what I can tell, I don't think it's a debate that it's coming. And, you know, we're seeing cracks in private credit. I think there's going to be a lot worse. And so my point is, is, you know, and then we still have the situation that Japan and the Japan trading like an emerging market where yields are going up and the currency is going down. So even if we get a resolution on Iran and geopolitics, I still am, I still don't like. the risk, I still think we need very aggressive, like, I still think anything less than probably like negative interest rates is negative for risk, is tightening financial conditions. And so I, at the very least, I don't, I don't think that's a world where I'm going to wake up in a month and Bitcoin's going to be at $120,000. I'm going to go, oh, God, now I've got to buy it back and what have you. I could be totally wrong. And if that happens, that's okay. You know, some of that I would expect gold would probably go up with that and ease some of that pain.

But that to me, I still feel like we're in a risk off world. There's a lot of really big issues that have to be resolved. And when you've got a lot of debt, you don't have a lot of maneuvering room to resolve those things. It's interesting that you bring up the private credit stuff. I was doing a show with Jeff Snyder last week, and he talked all about this and the issues that are happening in the private credit market and he was saying like while he's not sure there's potential that this leads into another

financial crisis type situation do you think we could see another 2007 come out of this? I don't know. I have not, there are things that remind me of the early days of it, right? Like the last week with the three months ago, some Black Rock fund credit was marked at 100

and then three months later it's marked at zero. You know, it's like the South Park chicken meme, right? And it's gone, right? And the one he was bringing up was Blue Owl, I think. Yeah, Blue Owl, I had not, you know, we've written a little bit about that. It's not, you know, I don't cover the company or anything, but people that I respect have said there's some real issues with credit quality. And again, I think if you take a step, but to me, it's a, I think it's a symptom of a broader issue of the pace of AI disruption of productivity growth is too fast. You know, we talked about this down in Nashville, right, last fall, where it's moving too fast.

And you're seeing this in youth unemployment. You're seeing this in credit, you know, credit delinquencies. You're starting to see unemployment move up a little bit off the lows. So could it be 2007? Maybe. But to me, it's a, the reason why I'm so concerned why I still am sort of okay holding off on getting fully back to a really overweight Bitcoin position is unlike 07, you know, debt to GDP in 2007 at the federal level was 60%, right? That we still had all that balance sheet room. The deficit was, I don't know, one and a half, two percent.

Maybe maybe two and a half percent, even with a war going on. maybe it was 3%. But now, if you have credit issues, and I think you're going to have consumer credit issues, simply because of the AI side. It is just, it is, you know, as we talked about in the fall, like this, to me, it reminds me so much of what China did to the Rust Belt, except, you know, the rust belt, you know,

the loss of 35% of manufacturing jobs was ultimately, the pace of that was governed by the spin. at which the Chinese could build factories. And as fast as they were, that was still, it took years and years. Like, this is going to go really fast. You know, it's, it moves, you know, connect up a couple computers, boom, gone, right? So then people say, well, it's still, it's still, you know, has hallucinations and, and, and of course, right?

And that's the exact same, you know, basically the exact same thing I heard from union guys here in the Rust Belt, right? Well, the Chinese, they're, you know, they just do low quality stuff. They're just cheap. And it's like, well, their quality is good, but they're still just cheap. They're not going to move up scale. Well, their quality's still really good. They're really cheap and they're moving up scale.

Well, my job's gone. And, right? So, like, you know, we can debate is the AI hallucinatory. We can debate how quickly. We can't debate that it's going to keep getting better faster than you think it is. And so we can debate, hey, is this a three-month-away problem? Is this a six, nine, 12, 18-month-a-way problem? It's probably not a two-year-away problem.

And again, look, in 2008, this is February of 08. So we've already had, right, we've got 2005 home price, you know, Greenspan raises rates in 2004, Summer of O four, Summer of O five, home prices peak, start to roll over. Fall of O six, subprime losses start piling up at that point. Oh, the worst case, like $60 billion in losses. Maybe a hundred worst case. That was like a huge shocker.

Late in 06, I remember that, if I remember right. May of 07, Bernanke says subprime is contained, in essence. July of 07, you know, poof, three billion in mortgage funds gone. Wait, what? Even then, the S&P set a record in October. February of 08. So after all of that, right before Bear Stearns goes boom in March of 08, gets bailed out for two bucks.

In February of 2008, New York Times reports that the mortgage delinquency rate, mortgage delinquency and homes in foreclosure is across all homes in America is 7.3%. 92.7% of mortgages in America were current. Month later, Bear Stearns, over the summer, Fannie Freddie, Bazooka, Lehman, Leman, literally, seven months later, eight months later, we were that close to the entire financial system collapsing with 92.7% of mortgages current. So the whole debate around this AI, AI is not going to take all the white color jobs. Like, you're right. It's going to take a few of them. And those people aren't going to pay their mortgages and their car loans and credit card card bills. And then those things are going to blow up something in private credit and private credit's going to have an issue.

And then the banks are going to pull back on lending and da-da-da-da-da-da-da-da-da-da. So to me, I don't know the whole private credit thing and how levered they are and where they're connected. I know the whole system's highly levered and I know that we are as a government, as a federal government with receipts at all time highs, we are barely covering entitlements plus interest expense. Any kind of recession will force us into default on the treasuries or entitlements or print the money. And they'll print the money. So that to me is like the, I don't know how, I don't know how they're going to get there. But I'm like, I'm pretty sure, you know, to me, the only debate is, is like how fast. You know, it's, it's, you know, in golf, right?

They don't ask you. Right? They don't ask you in golf, they don't ask you how. They just ask you how many. You know, you know, in AI disruption of the economy and will it create a deflationary, like sort of a credit crisis? is it for me it's not you know how it's just how many months see the I've not heard that I've not thought about it that way where you talk about the Rust Belt and China taking those jobs and in reality it doesn't matter who's taking the jobs just someone's taking the jobs and they're not yours anymore

and and we've seen what happened in the Rust Belt and there's like a there was a massive growth in like the opioid epidemic and alcoholism and people dying and it was very isolated from the coasts but this is not going to be this is going to be entirely different for it. And it's really scary. Like, why do things just, I don't know if this is doomism, but things just seem to get worse, Luke. You know, it's, I don't know. It's a fascinating study in the American psyche, I think, that it's just like, you know, versus say like the Russian psyche, right?

Like, you read a Russian novel and you're like, oh, my God, it is like one bad thing after another. And then you, like, look at Russian history. you're like, well, that checks out, right? Whereas in America, right? It's like American movies, they all have the same plot, right? Which is like, uh, something happens and uh, redemption gets the girl, happy ending. That's like all American movies.

You talk to someone in the Rust Belt in America, like it's not all happy movie. Like we've been to any number of funerals for kids that overdosed, parents that overdosed, uh, suicides, what have you. We saw these jobs lost. You know, 1965, Cleveland was like the fifth richest city in America. you know, by 1980, the river, or 1975, the river was on fire, right? So, like, it happens fast. And, and, um, but it's fascinating, right, the psyche of America, like, hey, it always, we always get a happy ending. People like, you never short America. You never short America over the span

of your lifetime. You shorted America in 19, you know, November 23rd, 1963, the day after they shot JFK, and you covered your short in 1980, it's a pretty good time to short America. If you short, in America in October 1929, you covered your short like 1933, 1935, pretty good short, right? There's periods of times where stuff happens, you know, and in different parts of the country, right? If you shorted the American, you know, farm belt right before the dust bowl, horribly, that was a great short. It was a disaster. And when you have these losses of meaning, planes Native Americans in this country,

they lost their meaning, they were put on reservations, they drank themselves to death as they lost their meaning, even though it was a better way of life. They lost their meaning. You take a bunch of Soviet apparatchets, and under the Soviets, things were not great, especially in the 70s and 80s. They were not great at all.

They got a better way of life. and they drank and shot themselves to death at staggering rates through the 90s because they lost their meaning. 2000s, I live through it. Ruspa, you take people's meaning away. They drink and shoot themselves to death at staggering rates. And so there's like this, you know, a lot of the people that are sort of in charge of the AI renaissance are, for lack of a better word, autists, right? They are brilliant people whose EQ is probably not really high. It's just all going to be great.

We're never going to have to work again. Elon's like, well, we're just going to have everything's going to be like free. And you're like, how about between here and there, dude? Like, you know, and he doesn't have to think about those things. I was worth whatever, $100 trillion. I wouldn't either. But the rest of us do. and that's like the reality.

And forget about the social side of it for a moment, the credit side of it. Every single person that loses their job or loses wages to an AI, none of these people are living debt free. Like there are so few people living debt free. So I just, to me, that's like a major, major story around, you know, I think ultimately rates will be much lower. They could be negative. I don't know how they, you know, universal basic income job guarantee. There's a lot of different ways you can try to handle this.

But we're not at the level of sort of panic that I would like to where I'm like, okay, let's go. I want to own everything. I'm much more rifle shot approach. And I'm in a very cautious position right now. Yeah. The crazy thing there about like Shorting America is I can see the sort of fabric of society breakdown that you're painting here. Like the loss of meaning is is incredibly impactful.

But at the same time, it will probably be American companies that benefit the most. So it's just like even greater wealth divide. And I think UBI seems just an obvious solution to this that I think will be tried. Who knows if it'll work. But at the end of the day, it seems to all lead back to someone's going to press the money printing button. I think so. So how long do you think we have until this snowball gets out of control and someone does have to do a turbo print. I don't know, probably only three to six months. Depending on, you know, AI.

I mean, remember where we're like literally, like two weeks ago before the whole Iran thing where it was like, you know, we literally had just gotten where, you know, Jack had fired 40% of his workers, right? And it was like, holy cow, you know, and sort of all of the, you know, Kevin Bacon's, you know, you know, everything is under control or what does he say in an old house,

right? Remain calm, right? The people, those people in Marcus, they're like, well, Jack, you know, he has way too many people anyway, and he had way too many people at X, and they got rid of all those people, and it didn't affect X's thing at all. I'm like, you're missing the entire point, dude. Yes. Okay, let's say you're 100% right. And let's say they do that. Let's say there's lots of organizations. I didn't dinner like last fall with a corporate exec who fairly high up. He's like, yeah, corporate, like 60% of corporate's just showing up.

And I'm like, that's insane. Right? So you go and be saying big corporations, show up, do your job, go home. Okay, great. How many of those just show up, do your job? Like, and again, 92.7% only 7.3% of mortgages going into delinquency or default. Kaboom, whole system. So 60% of the job is showing up and just like, what percent of that's AI going to take?

Like Morgan Stanley just blew out 3% of the workers and with record profits, by the way. And they didn't say anything about AI in the release, but then New York Post over the weekends, like that execs are quietly saying it's AI related, that they're just getting more efficient. 3%. 3%. 3%. And we're not a manufacturer. People like, well, they're just all going to go to construction and trades and all this. You're like, come on.

You know, I've seen that movie. Like, you don't teach old dog's new trick. I'm an old dog. You know, 50-year-olds don't go like leave banking. Well, I was a commercial lender and I had a golf membership. I was done every day to four on the course by five. And now I'm out of a job. I got a mortgage.

I got two kids in college. I got a $2,000 a month lease on my Mercedes or my Range Rover. And now I got to go learn how to trade. Come on. These people are high. This is not how that's going to go. Maybe on the margin, but for most of them, no. So I think it's going to happen faster than people think.

I really do. And I think, look, the jobs number down 92,000. Everything is star-spangled awesome and we're losing $92,000 and $92,000. I think it's a big deal. And it was fascinated because of the Iran war. No one said a thing. Like it wasn't even if. If there was no war and we printed that jobs number, holy cow, nobody even noticed.

It was like wag the dog. I guess the positive notes close out on is that for people, for the people that do harness AI and use it in like an interesting and meaningful and maybe novel way, there's going to be massive opportunity. There'll be a billion dollar company run by one person at some point. So there is hope out there. Oh, yeah, right? Like, that's, you know, it's, you know, I think we even talked about this last time in Nashville.

Like, like, there's, there's a couple eighth graders in a garage happening like right now. And there's, they are going to put some like $10 billion US company out of business. Yeah. And, you know, we literally said that in October. This was right. Mid October when we were together. And in February, software as a service is like, yep, right? Which is essentially happening a couple of eighth graders in a garage can now.

vibe code, like, that was the fear, right? And, and AI is only going to get better. So there's going to be a lot more of those. And that's like super exciting and super scary, right? It gets like, you know, you've got to be on your game. Like, you can get disintermediated in some of these traditional white collar positions. And you can be a disintermediator. And so like, okay, here we go.

Disruption everywhere. Disruption is the theme of this show, I think. Luke, this has been awesome. Thank you very much for making the time. I will let you go. But before we do, tell everyone where they can get your newsletter and follow you. I'm sure everyone knows. Absolutely.

No, thank you. I appreciate it. If they're interested in more information about our different mass market and institutional research products at fFTT-L-L-C-L-C-com and Twitter or X, sorry, Elon, at Luke Gromman, L-U-K-E-G-R-O-M-E-N. I still can't get used to saying X. either. Luke, thank you so much, man. I appreciate it. Thanks for me on, buddy. We'll talk to you soon. Thank you.