Is a $40k bitcoin bottom coming as AI sucks up liquidity?

Bitcoin is struggling to hold its ground while US stocks keep printing new highs. For many crypto investors, that feels upside down. If risk assets are booming, why isn’t BTC ripping like it did in 2021? Under the surface, the macro picture looks very different this time – and it could mean more downside before the next major leg higher.

Why bitcoin is weak while stocks hit new highs

On the surface, US equities look unstoppable. Major indices keep setting all-time highs and the mood in tech is euphoric. But according to macro analyst Luke Gromen, this rally is far narrower and less healthy than the headlines suggest – and that matters for bitcoin.

He points out that a small cluster of AI-related mega caps is doing most of the heavy lifting. Strip out the big AI names from the S&P 500 and the index is flat to slightly down since the recent Middle East conflict escalated. Emerging markets show a similar pattern: once you remove a few AI and chip giants, the rest of EM is actually underperforming badly.

In other words, liquidity is being sucked into a handful of AI winners. Oil and broader commodities are also drawing capital as prices grind higher. Everything outside those pockets – including bitcoin – is either flat or down. Gromen describes BTC as one of the last functioning “smoke alarms of liquidity,” and right now that alarm is flashing warning signs rather than confirming a healthy, broad bull market.

AI: real earnings, tricky accounting, and future risks

AI isn’t just hype – there is real demand and real spending. But the way this buildout is accounted for can make earnings look stronger than the underlying cash flows.

Here’s the basic dynamic:

• AI infrastructure (chips, data centers, networking) is built upfront.
• Companies book revenue now, while capitalizing much of the cost and amortizing it over time.
• That accounting treatment pushes reported earnings up quickly, even as cash flows are heavily negative.

As long as the buildout accelerates, earnings estimates rise and stock prices follow. But if anything slows the pace – supply bottlenecks, permitting issues for data centers, chip shortages, or policy shifts – the math flips:

• Revenue growth slows as new buildouts pause.
• Amortization from past spending keeps hitting the income statement.
• Reported earnings can flatten or fall, even as cash flow improves.

At that point, the market has a decision: will investors tolerate slower earnings growth in exchange for better cash generation, or will they rotate out of AI into beaten-down assets like bitcoin, gold, and broader value stocks? Gromen suspects we’ll see a period where AI names underperform once the buildout cools, but timing that shift is extremely hard.

Unlike the dot-com bubble, however, AI has been identified as a strategic battleground in the new great power competition. That means governments – especially the US – have strong incentives to support the sector, keep capital flowing, and avoid a brutal bust. Policy support can extend the cycle and keep liquidity concentrated in AI for longer than traditional market logic might suggest.

Can bitcoin and gold be deliberately suppressed?

In a world of rising deficits, reshoring, and strategic rivalry with China, a weaker US dollar is almost a policy goal. A softer dollar helps US exports, supports domestic manufacturing, and can rebalance trade. But there’s a problem: a weaker dollar is usually bullish for gold and bitcoin, which loudly signal to the world that fiat is being inflated.

According to Gromen, there are powerful interests in the US that don’t want gold and BTC screaming “monetary debasement” while Washington tries to fund massive deficits and maintain confidence in Treasuries. That creates an incentive to manage the optics by leaning on derivatives and financial engineering.

How could that work in practice?

• Derivatives expansion: By expanding futures, options, and structured products, demand for “bitcoin exposure” can be satisfied without equivalent spot buying. If large players write calls or create synthetic BTC exposure, investors think they’re long bitcoin, but less real BTC is removed from the market.
• Similar playbook to gold: The gold market has long been criticized for its large paper market relative to physical supply. A similar dynamic in bitcoin – especially via regulated products and options – can dampen price signals in the short and medium term.

Over the long run, Gromen doesn’t believe derivatives can override the fundamental scarcity of bitcoin. But in the short run, they can influence price, especially when policymakers are motivated to keep hard money signals muted while they run the system “hot.”

How this cycle could end: stocks up in dollars, down in hard money

Gromen’s base case for the next phase of this macro cycle is subtle but important for crypto investors:

• Equities up in nominal dollar terms.
• Equities down when priced in gold or bitcoin.
• Bond yields hovering in a “managed” range (roughly 3.75–4.5% on the 10-year).

We’ve already seen a version of this since the Fed began hiking in 2022. Even with the recent equity bounce, many stocks are still significantly lower when measured in gold over the last few years. Long-term US bond futures have been crushed in gold terms over the last decade.

For bitcoin, that framework implies:

• The dollar price of BTC can be volatile and even fall sharply in the short term.
• Over a longer horizon, bitcoin should outperform both stocks and bonds when you adjust for monetary debasement.

If you’re trying to understand where a potential bottom might form in this environment, it’s worth pairing this macro view with technical perspectives. For example, some analysts see room for BTC to revisit the $40k–$50k area later this year, as discussed in this breakdown of whether bitcoin is heading for $40k or has already bottomed.

The Iran conflict, oil, and why markets look complacent

One of the biggest macro wildcards is the ongoing conflict involving Iran and the closure of the Strait of Hormuz, a critical chokepoint for global oil flows. Gromen correctly anticipated that the strait could remain effectively closed for months, yet markets have been surprisingly calm.

Oil is up roughly 50% from pre-war levels, but not at the crisis prices many would expect given the duration of the disruption. Bond yields have risen, especially in oil-importing countries like Japan and South Korea, but equity markets haven’t fully priced in a serious energy shock.

Gromen likens the current mood to someone falling from a 100-story building and saying, “This feels like flying” as they pass the 40th floor. The real damage comes when inventories hit tank bottoms and the system has to ration demand via price. That’s another way of saying: stagflation risk is building.

If oil inventories get dangerously low, prices will have to spike to destroy demand. That typically means recession plus inflation – the worst combination for heavily indebted governments. Tax revenues fall while interest costs rise, blowing out fiscal deficits even further. In that kind of environment, hard assets like gold and bitcoin tend to shine, but the path to get there can be extremely volatile.

The “Suez moment” and a weaker dollar world

Gromen argues that the US is approaching its own “Suez moment” – a reference to the 1956 Suez Crisis that marked the beginning of the end for Britain’s role as the world’s dominant power. After Suez, the UK endured two decades of elevated inflation and a long, grinding adjustment to reduced global status.

For the US, a similar moment could come from a visible loss of control in the Persian Gulf and a gradual retreat from acting as the world’s security guarantor. If other powers – especially China – step in to manage energy routes and security, several trends accelerate:

• More oil and commodities priced in currencies other than the dollar.
• Less global need to hold large dollar reserves.
• More demand for gold (and potentially bitcoin) as neutral settlement assets.

As fewer foreign buyers naturally absorb US Treasuries, the Federal Reserve and domestic banking system will be forced to finance more of the deficit. That implies more money creation and a structurally weaker dollar over time. Again, this is a long-term bullish backdrop for BTC, even if the short-term price action feels painful.

Gold flows, “non-monetary” labels, and quiet trade settlement

One of the more underappreciated stories in Gromen’s work is the surge in US exports of so-called “non-monetary” gold. Over the last several months, non-monetary gold has become one of America’s largest export categories, at times surpassing aircraft and pharmaceuticals.

Much of this gold is shipped to Switzerland and the UK, then on to China and Hong Kong. Regardless of the precise classification, the economic reality is straightforward: the US is sending gold out and receiving fewer goods in return, which effectively narrows the trade deficit with China. That is, in practice, trade settlement in gold.

Why call it “non-monetary” gold? Because under IMF rules, monetary gold held by central banks doesn’t have to be reported in the same way. Non-monetary gold appears in trade statistics; monetary gold can move quietly between sovereigns without showing up in those flows. That means the visible surge in non-monetary exports may only be part of the story.

China, for its part, has spent years building a global gold infrastructure:

• Offshore yuan clearing banks in every major gold hub (London, Switzerland, Dubai, Singapore, Hong Kong, Shanghai).
• New large vaults at key airports, including a 2,000-ton facility in Hong Kong run by China’s largest courier.

This architecture supports a “no ticky, no washi” system: if you want Chinese goods or access to Chinese markets, you can pay in yuan, then convert surplus yuan into physical gold and take it home. Settlement happens in hard assets, not trust in another country’s IOUs.

Why gold is leading and bitcoin is still catching up

In a world where “nobody trusts anybody,” physical gold has a big advantage: it’s tangible, it can sit in a vault next to tanks and missiles, and it doesn’t depend on any digital infrastructure or third-party custody. For aging political leaders and military planners, that simplicity is compelling.

Bitcoin is technically superior in many ways – easier to move, easier to verify, and harder to confiscate if self-custodied correctly. But sovereign adoption faces hurdles:

• Concerns about backdoors or pressure points via centralized exchanges.
• Limited technical understanding among top decision-makers.
• Regulatory and political uncertainty around openly using BTC for state-level settlement.

Gromen believes we’re heading toward a world where countries increasingly demand settlement in hard assets – gold, key commodities, and eventually more bitcoin – rather than in each other’s fiat. But for now, gold is the primary beneficiary at the sovereign level, while bitcoin remains more of a parallel, market-driven hard money system.

Is a $40k bitcoin bottom realistic?

Gromen has been cautious on adding back to his bitcoin position after taking profits near the highs, and he’s openly watching for a deeper pullback. Some technical analysts he follows see a possible BTC bottom forming in the $40k–$50k range later this year, potentially in Q3 or Q4.

That kind of move would fit with:

• Continued liquidity drain into AI, oil, and commodities.
• Short-term price suppression via derivatives and macro uncertainty.
• A later phase where equities wobble, AI momentum cools, and capital rotates back into hard money.

For traders and long-term holders alike, that suggests being mentally prepared for a scenario where bitcoin revisits lower levels before the next major advance. It’s worth studying how past pullbacks have set up major bottoms, as explored in this guide to where bitcoin is likely to bottom and how bad a drop can get.

Realism over doom: what this means for bitcoiners

Gromen often gets labeled a “doomer,” but his view is better described as statistical realism. Over the last 150 years, every country that has pushed debt-to-GDP above roughly 130% has ended up defaulting in some form, usually via inflation. The US crossed that threshold in 2020. Long-duration bonds have already been punished in real terms, and the pressures that drove that repricing haven’t gone away.

Layer AI disruption on top of that – with either overhyped valuations or real, painful job losses – and the current equilibrium looks fragile. Either AI isn’t as economically transformative as its boosters claim, or it is, and then it will gut white-collar employment and tax bases in the near to medium term. Neither path is smooth for a highly indebted system.

For bitcoin investors, the takeaway is not to panic, but to understand the environment:

• Short-term: BTC can be buffeted by liquidity shifts, derivatives, and geopolitical shocks. A move toward $40k–$50k is possible.
• Long-term: In a world of structural deficits, weaker fiat, and rising demand for neutral settlement assets, bitcoin’s core thesis remains intact – and arguably stronger.

Position sizing, time horizon, and risk management matter more than ever. The macro backdrop is messy, but for those who can look through volatility, the combination of realism about the system and conviction in hard money may be exactly what’s needed to navigate whatever comes next.