Recently came across an interesting analysis about how AI-induced deflation could overturn the entire macroeconomic picture. And this makes us think about the future of Bitcoin in this context.

The essence is this: if a deflationary scenario truly develops, central banks won't sit idly by. They will start printing money to save the banking system, and economists will justify this with elegant theories. You know how it works.

In addition, if the current administration pursues aggressive fiscal policies with huge budgets, the Fed is likely to cut rates and start injecting liquidity. That’s the standard playbook.

But here’s what’s interesting: Bitcoin’s decline since Q3 last year might not have been caused by inflation expectations, as many thought, but precisely by deflationary pressure. The market seems to have realized earlier that deflation is the main threat. And Bitcoin can only truly recover when this deflationary pressure begins to weaken.

Another point to consider: banks are interested in Bitcoin not just for nothing. They need retail liquidity, broad trading from ordinary users. If Bitcoin loses this retail appeal, it could simply become an useless asset for big players. So, the key is to watch this indicator.