Critique: “Bitcoin is too high now, could be worthless soon. Put your money in cash-flowing assets.”

00:01 I got this comment on one of my Facebook 00:03 post posts that I wanted to critique. It 00:06 said, "Bitcoin is too high right now. 00:08 Could go to zero tomorrow. Buy cash 00:11 flowing assets." I want to take apart 00:14 that comment piece by piece critique by 00:16 critique for each of those three items. 00:18 One, he spelled uh Bitcoin as bit 00:21 spacecoin. Uh for the record, it's one 00:23 word. Bi t o i n. One word. And then he 00:26 said bitcoin is too high right now. to 00:29 obviously that should be to o so too 00:31 high right now. Anyway, that being said, 00:35 uh let's let's go line by line. Bitcoin 00:38 is too high right now. Clearly, this 00:40 individual is stuck comparing Bitcoin to 00:42 the past. But that's not what you should 00:44 ever compare Bitcoin to because Bitcoin 00:46 has always been too high right now 00:48 compared to every price in the past. You 00:51 know, as long as you're looking back, 00:53 you know, three or four years, it's 00:54 always been higher. And so comparing it 00:57 to the past doesn't make any sense 00:58 because by that definition, Bitcoin was 01:00 expensive when it was a penny because 01:02 prior to a penny, it was worth zero. And 01:04 when it was worth 10 cents, it was 01:06 expensive compared to a penny. So past 01:08 comparisons make no sense. What you 01:10 should compare it to, for example, is a 01:12 forward comparison like gold. Well, all 01:15 the gold in the world is worth $24 01:17 trillion and all the Bitcoin in the 01:19 world is worth $2 trillion. So, Bitcoin 01:22 can go up by a factor of 10 before it's 01:25 expensive compared to gold. Until then, 01:28 it is cheap compared to gold. And gold's 01:31 value is predominantly driven by its 01:33 monetary properties, not its industrial 01:36 or decorative uh jewelry uses, for 01:39 example. And so, the right way to 01:42 compare Bitcoin is what is the value of 01:44 a neutral reserve asset? meaning an 01:47 asset that anyone in the world can own, 01:48 any government, any person, any company, 01:50 that nobody else can make more of that 01:53 has perfect monetary uh properties and 01:55 qualities. What is that value? Well, we 01:58 can debate. Is it the value of all the 01:59 gold in the world? That's sort of an 02:01 easy threshold. If so, that's more than 02:04 10 times as big as its current price. If 02:06 it's the value of half of all of the 02:09 assets that are currently used uh as a 02:12 store of value, then you're looking at 02:15 10 or $20 million per Bitcoin. And if 02:18 it's half of all the assets in the 02:19 world, because half of the assets are 02:21 used as stores of value, you're looking 02:23 at like $43 million per coin. I have no 02:26 idea what the right number is, but 02:29 115,000 02:30 is not expensive by any measure. It's 02:33 not expensive unless you are only 02:35 looking backwards. Uh the next critique 02:37 is it could go to zero tomorrow. No, it 02:40 can't go to zero tomorrow because it has 02:42 monetary properties. The same way gold 02:45 will not go to zero tomorrow because 02:47 gold has monetary properties. So 02:50 monetary properties include something 02:51 being divisible, durable, portable, 02:54 fungeible, verifiable, authenticable, 02:57 identifiable, and most importantly 02:60 scarce. So depending on who you ask, 03:02 there is somewhere between five and 03:04 eight common properties that are 03:07 considered monetary properties of an 03:09 asset. And Bitcoin is better in all of 03:12 those categories than anything else that 03:14 exists in the world. Gold is pretty 03:16 good, although gold is not sufficiently 03:19 divisible and not sufficiently portable 03:22 and not sufficiently scarce, believe it 03:24 or not. Um, so Bitcoin is superior to 03:27 gold and other every other monetary 03:29 asset. So, Bitcoin will not go to zero 03:32 unless its monetary properties go to 03:34 zero. If its monetary properties go to 03:37 zero, then of course it would not have 03:39 monetary value and it would not be 03:41 valuable. But that's not going to happen 03:43 for all of the reasons I've talked about 03:44 in numerous videos for the security, the 03:47 decentralization, 03:49 um, and all of that of the Bitcoin 03:51 network. Bitcoin has ideal monetary 03:54 properties that will not go to zero 03:56 tomorrow. Therefore, its value will not 03:58 go to zero tomorrow. And its current 04:00 value of $115,000 per coin reflect the 04:03 fact that it has those monetary 04:05 properties. And that's not going to 04:07 change. It will not suddenly stop having 04:10 21 million bitcoin tomorrow morning. And 04:13 as long as there's only 21 million 04:14 bitcoin tomorrow morning, the value is 04:16 not going to zero. So, uh the third 04:18 critique was by uh the individual posted 04:22 buy cash flowing assets. What he means 04:24 is buy real estate, you know, where 04:26 somebody a tenant pays rent or buy a 04:29 stock that has a dividend or something 04:31 like that. But there's a problem with 04:33 that strategy, which is that every cash 04:36 flowing asset right now is ridiculously 04:39 expensive. So real estate, stocks, 04:42 everything you could put your money 04:43 right now in, I would argue, is 04:46 ridiculously expensive as compared to 04:48 the kind of return you would expect. 04:51 Now, that's measured with something 04:52 called a price earnings ratio, which is 04:54 what is the price for every $1 of 04:58 earnings that can be expected from that 05:00 asset. So, if a stock has a price 05:03 earnings ratio of 5050, that means you 05:06 have to pay $50 for every $1 of profit. 05:09 Another way of looking at that is it's 05:11 the equivalent of a 2% uh yield. 150th 05:15 is a 2% yield. uh meaning you're 05:18 expecting a 2% return on your 05:20 investment. Well, stocks right now are 05:22 ridiculously 05:24 high priced with regard to price 05:26 earnings ratios and everybody is saying 05:28 that well that's sustainable because 05:30 stocks will just go up forever and every 05:32 technology you know company in the 05:34 Magnificent 7 is going to be worth you 05:38 know immeasurably new trillions of 05:40 dollars every year and that's just 05:42 objectively not the case. So 05:44 historically through the stock market, 05:46 anytime stocks have gotten way out of 05:49 whack compared to their price historical 05:52 price earnings ratios, eventually they 05:54 revert to the mean. That's why people 05:56 say markets are mean reverting. What 05:59 does that mean? Mean reverting. Mean 06:01 meaning being meaning the average. So 06:03 mean reverting means average reverting. 06:06 Which means if the average price 06:08 earnings ratio for the stock market in 06:10 the past is 16, you know, times earnings 06:14 or something like that, I don't know 06:15 what it is, but whatever it is, it's a 06:17 whole lot higher than that right now. 06:19 And most analysts who look at the stock 06:22 market right now say, "Hey, these price 06:24 earnings ratios are not sustainable." 06:26 And so this individual is recommending 06:28 people buy cash flowing assets. But I 06:30 would argue there is not any cash 06:33 flowing assets that make sense to buy 06:35 right now because in my opinion real 06:37 estate is significantly overvalued. Uh 06:39 stocks are significantly overvalued. I'm 06:42 not aware of any asset that is on sale 06:45 right now and would be a good investment 06:47 other than Bitcoin, which is why I have 06:50 100% of my assets in Bitcoin because 06:52 everything else that I look at in the 06:54 entire world that I could invest in uh 06:57 makes less sense than Bitcoin. And so 07:00 anyway, to recap, this individual says 07:04 Bitcoin is too expensive. That is not 07:06 true. They say it could go to zero 07:08 tomorrow. That is not true. and they 07:10 should say you should buy cash flowing 07:12 assets. Again, in my opinion, also not 07:14 true. Uh but I thought it would make 07:16 sense to critique this individual's 07:18 comment uh step by step. And there you 07:20 go. Have a great night.