Netizen Premium | Bitcoin Deep Dive #7

Is Trump's 'Liberation Day' the Catalyst for Gold's Rise and Bitcoin's Future?

Global Reserve Reshuffle: Will "Liberation Day" Accelerate Gold's Rise?

President Trump's upcoming "Liberation Day" initiative on April 2nd could accelerate the ongoing shift in global reserve holdings, with investors already pouring $12 billion into gold ETFs in just two months. Since 2020, central banks have been steadily decreasing their fiat currency holdings as a percentage of global FX reserves, rotating specifically into gold as uncertainty grows. Our concern is that aggressive tariff implementation could frighten foreign investors away from US assets, especially with US debt-to-GDP ratio at an alarming 112% and tightening global liquidity conditions. This monetary shift creates a constructive backdrop for alternative reserve assets, with gold offering immediate defensive characteristics while Bitcoin positions as a long-term neutral reserve asset. Price action suggests we're witnessing the early stages of a shift in how nations and investors think about neutral reserve assets in a world of unsustainable government debt.

TLDR: Trump's "Liberation Day" may accelerate central bank gold acquisitions while indirectly validating Bitcoin's narrative as an emerging alternative reserve asset.

The $31 Trillion Question: Inflate or Implode?

Recent macro data has confirmed our view on stagflation - inflation won't budge without a real recession. The government is spending more and more tax money just to pay interest on its debt, creating a trap: when the Fed raises rates to fight inflation, it makes the debt payments even bigger, worsening the government's financial position. The Fed is stuck because it needs to fight inflation but can't raise rates too much since the government's interest payments and obligations already take up 100% of what it collects in taxes - even though tax revenue is near record highs. History shows that when a country's debt reaches 120% of its GDP, it has few good options - cutting spending (ie/ DOGE) enough to matter would cause too much economic pain to be politically possible, leaving either exceptional economic growth (ie/ a nuclear energy revolution) or inflation (ie/ what’s happening now) as the only real solutions. As this debt reality becomes clearer to investors, we expect them to move toward protective assets like gold first, while setting the stage for Bitcoin to show its value as money that can't be created out of thin air or seized by governments.

TLDR: The global government debt situation makes secular inflation increasingly likely, initially benefiting gold while setting the stage for Bitcoin's potential emergence as a significant reserve asset.

Gold's Moment to Shine Before Bitcoin's Great Decoupling

The market remains in the risk-off INFLATION regime that favors defensive positioning, with energy, commodities, precious metals, and cash outperforming since early March. Momentum signals show the S&P 500 remains bearish, the USD neutral, while Bitcoin maintains a neutral stance despite Ethereum's weakness and declining crypto market share. In addition, the US Treasury yield curve re-inverting means investors are expecting a recession or stagflation (slow growth, high inflation, high unemployment). Based on these indicators, we maintain that gold likely outperforms Bitcoin in the near term as markets navigate uncertainty, but we're also monitoring potential signs of Bitcoin beginning to trade on its fundamental merits rather than simply as a "tech proxy" or risk asset. This would mark an important maturation in Bitcoin's market behavior, even if the path there involves periods of correlation-driven volatility.

TLDR: Current market signals favor gold's defensive properties in the near term, but we're watching closely for signs that Bitcoin may begin trading more on its fundamental merits as a neutral reserve asset.

Defensive Stance Continues: DCA Model Holds at Reduced Allocation