Luke Gromen: Why Tech Stocks are Outperforming Bitcoin - But This Macro Shift Will End It

**Luke Gromen** (0:00)
Bitcoin is one of, if not the last functioning smoke alarm of liquidity, and it's telling us not good things.

**Natalie Brunell** (0:05)
What's the disconnect here?

**Luke Gromen** (0:06)
AI is sucking all the oxygen out of the room, all the liquidity out of the room. I think that's happening to Bitcoin as well. We're in a new great power competition. Left to its own devices, I would think this would burst under its own weight at some point, but it's not going to be left to its own devices because AI has been identified as a key battlefield of the great power competition. And so my base case is the way this ends, with stocks up big in dollars, and stocks down in gold, and stocks down in Bitcoin. There are elements in the US that don't want to see that because those things will be communicating to the world, hey, you're just inflating.

**Natalie Brunell** (0:47)
Hey, everyone, here with me, the one and only Luke Gromen. I have to share, we were actually supposed to do this recording in person for the very first time, and unfortunately, I ended up very sick. So this is my first day back at work. Luke, you were gracious enough to reschedule, do a virtual recording. So thanks so much for being here.

**Luke Gromen** (1:05)
Well, thanks for having me on. I'm glad you're finally feeling better. I felt terrible that you got ill.

**Natalie Brunell** (1:10)
I know, we gotta reschedule the in-person one. I'm really looking forward to it when it eventually happens. I've got lots to talk about that you've been writing about. Let's actually start off with the Bitcoin question that everyone wants to know.
Have you started buying back in or are you waiting for Bitcoin to crash lower? Because it's not doing well in these last couple of days.

**Luke Gromen** (1:29)
No, it's had a tough couple of days. I nibbled a little bit, but basically the answer is no. I have not really bought back in in any real way. Again, I didn't sell it all, but I sold most of it.
The answer is no, I haven't. I'm watching with interest here, the way it's been trading, particularly the last three, four days, it's had a bit of a rough stretch. I think there's potential information in that. Let's see.

**Natalie Brunell** (2:06)
Can you break down why you think this is happening when we're seeing such momentum in stocks? We keep seeing the all-time highs. This is almost reminding me on the stock side of 2021, right? Every other day, all-time high, all-time high. But Bitcoin was doing so well back then. We were in a bull run. So what's the disconnect here?

**Luke Gromen** (2:27)
I don't know for sure. My working hypothesis is if you look at sort of the underpinnings of this market run, they're not really healthy, actually. The headline indices, yes. All-time high, all-time high, all-time high. And it's like seven stocks. Just saw a chart yesterday that X things related to AI, the S&P 500 is flat to down slightly from the day before the Iran War started.
I saw another chart that showed if you look at, if you take US, MSCI US and then MSCI emerging market, and you take TSMC, Samsung, and another big AI slash memory related name, I can't think of it, out of the US or the MSCI EM. It looks on the surface like EM is crushing the US.
But if you take those three or four AI related names out, EM is actually getting crushed. So there's these, we've seen the stuff about breadth. And I think that's breadth of the market is very, very poor for where we are in terms of the headline indices. And I think what's ultimately happening is, AI is sucking all the oxygen out of the room, all the liquidity out of the room, and it's all in one area. And I think that's happening to Bitcoin as well. I think it's a victim of that as well. And as we've talked about many times, I think Bitcoin is one of, if not the last functioning smoke alarm of liquidity, and it's telling us not good things. Now, at the same time, we also have oil sucking liquidity out of the room, and we are doing everything we can to try to keep oil down. Well, the Trump administration, the US, doing everything they can to try to keep oil down, mostly via jawboning, Western SPR releases, et cetera. But oil is up 50%, what? 50% from even at these relatively lower levels, it's up 50% since the war started. So give or take. So I think you got oil sucking oxygen out of the room, commodity sucking oxygen out of the room, AI sucking oxygen out of the room in terms of liquidity, and everything else that isn't one of those three things that are directly related to it.