Bitcoin has liquidity in spades

00:01 hey everyone let's talk about liquidity 00:03 what is liquidity and why is it so 00:05 important in financial markets and all 00:08 you really need to know is that Bitcoin 00:09 has a ton of it so um if you you know 00:13 don't don't feel like you have to uh 00:14 watch this video unless you're 00:15 interested in the concept uh because all 00:18 you need to know is that Bitcoin has it 00:19 but if you're interested in more than 00:20 just Bitcoin has it well here's a quick 00:22 primer okay so liquidity describes how 00:26 liquid a market is well what does that 00:28 mean well how liquid a market Market is 00:31 describes how much buying and selling of 00:33 anything happens in that market and how 00:36 much buying or selling in can happen in 00:39 that market uh before it affects the 00:41 price so for example um if you have at 00:44 the Jackson Mississippi Farmers Market 00:47 if you show up with a dozen eggs almost 00:50 certainly you're going to be able to 00:51 sell them in a day if you show up with 00:53 10 dozen eggs you'll probably be able to 00:55 sell them in a day if you show up with a 00:57 thousand dozen eggs you're almost 00:59 certainly going home with your eggs a 01:01 bunch of your eggs that's because the 01:03 Jackson Farmers Market has some 01:06 liquidity for eggs but not a huge amount 01:08 of liquidity for eggs now if you go to 01:10 Kroger and you want you sign a contract 01:13 to be become one of their egg suppliers 01:16 that absolutely you can drop off a 01:17 thousand dozen eggs and Kroger has a 01:20 huge amount of liquidity for buying and 01:22 selling of eggs um so all financial 01:24 markets and all markets work that way so 01:27 why does that matter well because now 01:29 and then you run into situations where 01:31 people are excited about an asset that 01:33 does not have liquidity so for example 01:37 uh typically after people get scammed 01:39 one of the ways that a scammer will try 01:42 to pacify the person is by sending them 01:44 a crypto token that has almost zero 01:47 liquidity but a very high price so for 01:50 example um I was talking to one person 01:52 who had been sent a crypto token that uh 01:55 and they almost always use coinbase 01:56 Wallet not the real coinbase app not the 01:59 real coinbase mobile app that I 02:00 recommend you use but something called 02:02 coinbase wallet which is a uh another 02:05 app that coinbase does that will 02:06 basically show you anything it'll show 02:07 you I mean literally any token whe 02:10 whether it's junk or not so one person I 02:12 was talking to said well look you know 02:14 the scammer sent me 02:16 $20,000 of this crypto token so all I 02:18 need to do is convert the $220,000 of 02:21 this crypto token into US dollars or 02:24 into Bitcoin and then I'll basically 02:26 undo the scam and I told them I was like 02:28 yeah but the problem is that token does 02:30 not have liquidity the reason it looks 02:33 like it's worth 02:34 $20,000 is because the scammers are 02:37 selling buying and selling that token 02:39 from each other a little bit every day 02:41 to keep the price at a certain level but 02:43 if you actually go and try to sell that 02:45 token uh you're going to find out that 02:47 there's no liquidity meaning you're 02:48 going to find out that if you try to get 02:51 $220,000 for that token you have there's 02:55 there's no market for it again it's the 02:57 equivalent of somebody saying well I 02:58 sold one egg for a dollar at the 02:60 mississipp farmers market so I can make 03:02 a million dollars by selling a million 03:03 eggs and the answer is no you can't 03:05 because there's not a million dollars 03:06 worth of liquidity uh for selling eggs 03:09 so in this case um the person I we had 03:12 to jump through some hoops because it's 03:13 a pain the uh the scammers always make 03:15 it difficult to convert whatever they 03:17 send you back to US dollars because they 03:19 don't want you to figure out that what 03:20 they sent you is actually trash so in 03:22 this case uh we jumped through those 03:24 Hoops I I guided them through how to 03:26 jump through the hoops and coinbase said 03:28 hey even though I'm showing the balance 03:30 at $20,000 in coinbase wallet again you 03:32 don't have to worry about this because 03:34 you should not be using coinbase wallet 03:36 coinbase wallet is not something I 03:38 recommend I recommend coinbase the real 03:40 app where you can buy and sell Bitcoin 03:43 but anyway so we we got it figured out 03:45 and if they had tried to convert that 03:48 balance to US Dollars it was worth 17 so 03:51 the total liquidity for that scam token 03:54 even though the it looked like the token 03:56 was worth 03:57 $20,000 it was actually worth 17 if you 03:60 tried to sell it because again all you 04:02 know the only liquidity in that market 04:04 was the scammers selling themselves back 04:07 and forth a few thousand a day to try to 04:09 make the price look at it was at a 04:11 certain level now if you think something 04:14 that with 04:15 $20,000 that actual H is actually only 04:18 worth 17 cents for liquidity uh that is 04:22 actually not the worst I've seen so I 04:24 talked to one person and the scammer had 04:27 sent them a token it was like BTC M it 04:30 was like the the Bitcoin ticker symbol 04:32 but it had an m on the end of it and of 04:34 course each token was worth like 04:37 0000000000 something you know XYZ it was 04:40 basically each token was worth like 04:41 almost nothing but anyway the scammer 04:43 had sent them $17 million of this token 04:47 in an effort to shut them up and try to 04:49 keep them from going to authorities so 04:51 the scammer basically said look you sent 04:53 me tens of thousands of dollars of 04:54 Bitcoin in this case in both of these 04:56 cases the scam was that the scammer was 04:59 going to trade the Bitcoin and make them 05:01 more money so in both cases the scammer 05:04 came back when they asked for their 05:05 money back and the scammer said well hey 05:07 I can't give you your money back in 05:08 Bitcoin because I've been trading it but 05:10 I can give you this super valuable 05:12 crypto token and all you have to do is 05:13 just sit on it and so in the first case 05:15 it was you know tens of thousands of 05:16 dollars in this case uh the the total 05:19 even though the amount that had been 05:20 scammed was also tens of thousands of 05:22 dollars the scammer sent them a token 05:25 that uh the sort of headline price in 05:27 coinbase wallet was $17 million 05:30 so for a period of time they actually 05:32 thought they had $17 million so they 05:35 reached out to me and said hey I think 05:37 I've been scammed but if I haven't been 05:39 scammed I have $107 million well I was 05:43 sad to tell them that they indeed had 05:44 been scammed and they did not have $17 05:47 million and sorry but they just didn't 05:50 have $107 million um so we jumped 05:53 through the Hoops because at this point 05:54 I've Gotten Good at jumping through the 05:55 Hoops to see if uh you know how much a 05:58 token is worth if somebody's been 05:60 scammed now thankfully I'm proud to say 06:03 I'm not aware of anybody that follows me 06:05 or bought a Bitcoin at my recommendation 06:07 that has been scammed everybody I've 06:09 ever talked to that's got scammed got 06:11 scammed before I started you know doing 06:14 Facebook videos and posting about 06:16 Bitcoin they all got scammed before that 06:18 based on bitcoin that they bought of 06:20 their own accord and based on the fact 06:23 that they thought they were going to um 06:25 you know get more Bitcoin by sending 06:28 their Bitcoin to somebody on uh usually 06:30 it's WhatsApp by someone who reaches out 06:32 to them on WhatsApp offers to trade the 06:34 Bitcoin and make them more Bitcoin so in 06:36 every case these are people that are 06:37 that were not following my advice they 06:40 were not doing what I say to do they 06:42 bought the Bitcoin in both cases uh in 06:44 the both the two cases I'm talking about 06:46 they bought the Bitcoin before I was 06:47 even talking about Bitcoin and they um 06:51 you know they did what I tell people 06:53 never to do which is they sent their 06:54 Bitcoin to someone who promised they 06:56 were going to trade the Bitcoin and make 06:57 it worth more so this person supposedly 06:59 has 7 million of this 07:02 btcm token on it was like Capital BTC 07:05 and the lowercase like M and if you look 07:07 it up it's like some convoluted word 07:09 salad of what it's this token supposed 07:11 to do so I told the guy I was like well 07:12 sadly 107 million is probably only worth 07:15 17 cents the last guy I helped with the 07:17 exact same problem and his his like scam 07:20 token was like ethm or something like 07:23 that it was like ethereum but it was 07:24 like eth with a lowercase M and of 07:26 course it traded at you like a tiny 07:28 fraction of one penny and blah blah blah 07:30 so anyway I told the guy I was like well 07:32 your 107 million is probably worth 17 07:34 cents but if you're up for it we can 07:36 jump through the hoops and we'll find 07:38 out exactly what it's worth um so we did 07:40 that we jumped through the hoops and It 07:41 ultimately came back uh when we clicked 07:43 the you know convert now our preview we 07:46 didn't actually do it I told them don't 07:48 actually do it because we're we need to 07:49 go to law enforcement with this and and 07:51 both of them did but I was like so don't 07:53 actually convert it just click preview 07:55 so that you'll find out how much money 07:56 you'll actually get if you do convert it 07:59 and so he clicked preview and sent me a 08:02 screenshot and coinbase said you know 08:06 this is not a liquid Market expect 08:07 massive slippage the total amount of 08:11 balance that will be credited to your 08:12 account if you move forward by moving 08:15 107 by uh converting $107 million of 08:19 this crypto token into US dollars is one 08:22 penny and I told him uh well that's sad 08:25 that's 117th what I thought you were 08:26 going to get I thought you were going to 08:27 get 177 cents but you're actually 08:30 getting one single solitary penny so 08:33 that was the my my experience with the 08:35 least liquid token I'm I've I've ever 08:39 seen was $107 million of it that was 08:42 worth one penny and again it was worth 08:45 one penny because every day the hackers 08:46 got online uh or scammers I should say 08:49 the scammers got online transferred a 08:51 few bucks back and forth to each other 08:52 so that the market place looked like the 08:55 pr the token was priced at a dollar But 08:58 ultimately it obviously was not so you 08:60 know scammers will do that they'll 09:01 they'll create like a fictitious 09:02 cryptocoin and then every day they'll 09:04 they'll log in online they'll trade $1 09:07 of it to each other the next day they 09:08 trade it back the next day they Trade It 09:10 Forward the next day they trade it back 09:11 they just trade it back and forth 09:12 between themselves and that way it looks 09:15 like it has a price and they're like 09:16 look the token is worth 107 million and 09:18 the truth is no two scammers are just 09:21 trading a dollar of it back and forth 09:22 every day to try to make it look like 09:24 that supports the price but then when 09:25 you try to convert what looks like $107 09:28 million of this um you know you find out 09:31 it's only worth a penny because there's 09:32 no actual market for it um basically the 09:35 Market's like a dollar a day um but in 09:37 this case it was even worse than that it 09:38 was worth one penny uh for $107 million 09:41 of this coin and the only reason it's 09:43 even worth that is the scammers were 09:44 bidding one penny hoping that they could 09:46 get all that scam coin back so that they 09:48 didn't have to invent a new scam coin 09:49 for the next guy so um so in both cases 09:52 people lost tens of thousands of real US 09:54 Dollars and in one case it looked like 09:57 the scam token was $220,000 that was 09:59 really worth 10:00 and in the other case it was uh $107 10:03 million that was really worth one penny 10:06 now does this matter in the real world 10:08 it actually does because that Dynamic 10:10 also applies to legitimate things not 10:12 just scams so I told the story in an 10:15 earlier video earlier this week about um 10:18 a company stock that I sold I had six 10:20 figures of this company stock I bought 10:22 in 2021 and when I went online to sell 10:25 it on Fidelity um I uh I sold I had like 10:29 7,000 shares of it which is you know 10:31 irrelevant but um I had 7,000 shares and 10:34 I sold a th000 shares and the price 10:37 dropped by like uh the the overall price 10:40 of of this company uh the share price 10:43 dropped by I guess what was it it was 10:46 like 3% and it literally me selling a 10:50 th000 shares at a low price made it drop 10:53 you know 3% off a market cap of like 10:55 $700 million so whatever 3% of that it 10:58 dropped like I sold like barely any you 11:01 know for every thousand doll I was 11:03 selling the market you know the price 11:06 was dropping by like you know a million 11:08 dollars I mean it was it was a crazy 11:10 ratio and so I sold a th000 shares the 11:13 price dropped by by you know 3% I sold 11:17 another thousand shares the price 11:18 dropped by another 3% I I dropped you 11:21 know I sold another thousand shares the 11:22 price dropped by 6% I was like this is 11:25 crazy I'm dropping the price of the 11:27 entire market cap of this company is 11:29 dropping by like a $100 million because 11:32 little old me is selling a tiny little 11:35 share now I had bought a tiny little 11:37 share they had sold $75 million of their 11:40 stock so the total amount of stock out 11:42 there that could sell was $75 million 11:46 and I was selling just a tiny little you 11:48 know very very very extremely low six 11:50 figures amount of this stock so I was T 11:53 selling basically a little fraction of 11:56 one of the $75 million and I'm causing 11:59 the price of this thing to go down which 12:01 was not my intent I had no intention of 12:03 altering the price I thought the 12:04 marketplace for that stock was Liquid 12:07 enough that I could sell it without 12:09 altering the price but as soon as I saw 12:11 that I was like well I don't have a 12:13 choice here I want to sell this stock so 12:14 I can buy more Bitcoin and I I can't 12:17 help it that every time I hit sell you 12:19 know on a th000 shares and then 2,000 12:21 shares and then 1500 shares and then 12:23 another th000 and then another 2,000 or 12:24 whatever it was it was like five 12:26 different purchases the price of the 12:28 company dropped by like 3% % every time 12:30 I hit sell and I was watching I was 12:32 literally watching the stock price on 12:34 the stocks app in apple and I was like 12:37 this is crazy like I'm just trying to 12:39 exit my position here I'm just trying to 12:40 sell the stock I don't want the price to 12:43 change it's ridiculous that the price is 12:45 changing but that just shows you that 12:47 there was just almost no trading 12:49 activity for that and so that there was 12:51 just not enough people who wanted it at 12:53 one price or the next price or the next 12:55 price so every time I hit sell the price 12:58 dropped to the next lowest denominator 12:60 of people that were willing to buy it at 13:01 that price so uh the good news is 13:04 Bitcoin has tons of liquidity Bitcoin 13:06 has tons of billions of dollars of daily 13:10 liquidity which means today I was 13:12 talking to somebody um a few weeks ago 13:15 and they said yeah well what happens if 13:16 somebody you know sells five or10 13:18 million of Bitcoin doesn't it move the 13:20 price I was like no no no no no not five 13:23 or 10 million you know you can you know 13:26 you can buy or sell right now in Bitcoin 13:29 up to probably $5 billion before it 13:32 moves the price I mean you have to have 13:34 a massive amount of money now that's 13:36 still small I mean still nation states 13:37 major nation states are still looking at 13:39 Bitcoin and saying it doesn't have 13:41 enough liquidity to be a strategic 13:43 Reserve because we need to be able to 13:44 come in and out of 10 billion on a day 13:48 without it affecting the price and the 13:49 truth is Right now10 billion does move 13:52 the price as the price gets higher and 13:53 higher and higher you know in the early 13:55 days $10 would move the price then it 13:57 was a th you know then it was 100 then 13:58 it was a th000 then it was 10,000 then 13:60 it was a million you know 100,000 then 14:02 it was a million then it was 10 million 14:03 then it was 100 million then it was a 14:05 you know billion then it was you know 14:06 now we we're basically at where it's 14:08 like no you you really need to buy or 14:10 sell 10 billion dollar in somewhere 14:13 between a day and a week in order for 14:15 the price of Bitcoin to reflect that at 14:17 all meaning you're either buying and 14:19 it's pushing the price up a bit or 14:20 you're selling and it's pushing the 14:21 price down a bit but what you want is to 14:23 be able to however much you have to be 14:24 able to sell or buy as much as you want 14:27 with no impact on the price that is what 14:29 a W Market is you can buy or sell as 14:31 much as you want and there's no impact 14:33 on price that's what you want so anyway 14:36 thought I would throw that out there so 14:38 liquidity is how much buying or selling 14:40 or how much appetite there is for buying 14:43 and selling anything on any given day 14:45 and deeply liquid markets uh it's 14:49 important to have a deeply liquid Market 14:51 in order to uh you know know that you 14:54 can buy or sell anything scam tokens are 14:57 extraordinarily non-liquid 14:59 and even this very little company that 15:01 had just gone public um you know they 15:04 had almost zero not zero liquidity but 15:06 they had such low liquidity that even a 15:08 very small shareholder like me could 15:11 move the price um now there could have 15:13 been other factors at play maybe the 15:14 price was moving every time I hit Soul 15:16 cell even though I didn't intend it to I 15:18 don't know but I don't think there was 15:20 anything else at play because it was 15:21 like a one toone direct correlation and 15:24 I'm like I'm just trying to get out of 15:25 my position here like it's not my fault 15:27 the price is moving um so anyway let's 15:29 say um you get into this with you know 15:32 sort of smaller coins uh Stupid coins 15:35 that nobody should own anyway um but you 15:37 don't have this problem with Bitcoin 15:38 because Bitcoin has tens of billions of 15:40 dollars of daily liquidity and in the 15:42 future it will be you know hundreds of 15:45 billions of dollars of daily liquidity 15:48 when the asset class is even bigger than 15:49 it is today so that's what liquidity is 15:52 you don't really need to understand that 15:53 unless you're just curious uh all you 15:55 need to know is Bitcoin has a ton of 15:57 liquidity and whatever stupid coin that 15:59 someone's telling you about doesn't have 16:01 anywhere close to that liquidity so 16:04 don't chase stupid stuff because you 16:06 know real stocks and real bonds and real 16:08 Bitcoin have real liquidity meaning you 16:10 can buy and sell anytime you want 16:12 without moving the price unless you're a 16:14 massive Mega whale which I am not um but 16:18 a lot of these scam coins and altcoins 16:20 and stupid coins don't work that way and 16:22 the liquidity really does matter and 16:24 they don't have it and that becomes a 16:26 huge problem as soon as you actually 16:27 want to buy or sell some so have have a 16:29 great day everyone always a pleasure and 16:31 I'm here for anything you need thanks