Investment strategist Luke Gromen has identified a pivotal moment that could boost the bullishness of both Bitcoin and gold, according to a report by The Daily Hodl. Gromen, who is the founder of Forest for the Trees, a macroeconomic research firm, believes that the US Federal Reserve’s decision to allow inflation to run above its 2% target could lead to a surge in demand for both assets.
Gromen argues that the Fed’s new policy framework, which was announced in August 2020, represents a significant shift in its approach to inflation. Under the new framework, the Fed will aim to achieve an average inflation rate of 2% over time, rather than targeting a specific level of inflation each year. This means that the Fed will allow inflation to run above 2% for a period of time to make up for periods when it has been below 2%.
According to Gromen, this policy shift could lead to a loss of confidence in the US dollar and a surge in demand for alternative assets such as Bitcoin and gold. He argues that investors will be looking for assets that can protect their purchasing power in an environment of rising inflation, and that Bitcoin and gold are well-positioned to do so.
Gromen’s views are supported by recent price movements in both Bitcoin and gold. Bitcoin has surged to new all-time highs in recent months, while gold has also seen strong gains. Both assets are often seen as hedges against inflation and economic uncertainty.
However, not everyone is convinced that Bitcoin and gold are the best investments in an inflationary environment. Some analysts argue that other assets, such as real estate and commodities, may be better positioned to benefit from rising inflation.
Ultimately, the impact of the Fed’s new policy framework on Bitcoin and gold remains to be seen. However, Gromen’s analysis highlights the potential for these assets to benefit from a shift in investor sentiment towards inflation hedges. As always, investors should carefully consider their own investment goals and risk tolerance before making any investment decisions.
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