Why does Bitcoin go up and down with other assets, even when it has nothing to do with them?

00:00 everyone you may be wondering why does 00:02 Bitcoin go up and down with other assets 00:05 even though it should not be correlated 00:07 at all with them and answer it because 00:09 everything in the financial world is 00:11 linked to everything else in the 00:12 financial World regardless of whether 00:14 there's a direct tie or not so let me 00:17 give you an example um back when my 00:20 daughter turned 16 and got her driver's 00:23 license I had the need for less money 00:26 and more cars so my family was going 00:29 from two vehicles to three vehicles and 00:31 the total amount of money which means 00:33 stocks bonds or I guess stuff that could 00:36 be turned into money such as stocks and 00:37 bonds in US dollar cash and Bitcoin my 00:40 demand for those things was slightly 00:42 less because my demand for another car 00:44 was slightly higher so if I was the only 00:47 buyer in the economy one 00:52 second and I've since bought a lot more 00:54 Bitcoin since then but if I were the 00:56 only buyer in the economy and the only 00:58 thing in the economy was my my two 01:00 vehicles and my Bitcoin then you would 01:03 see a drop in the price of Bitcoin when 01:06 I converted some of that Bitcoin to a 01:08 third vehicle and you might be thinking 01:11 but wait those things have no 01:12 correlation to each other what does the 01:14 sale of cars have to do with the price 01:17 of Bitcoin and the answer is because 01:19 people are exchanging one for the other 01:21 they're buying cars with Bitcoin in my 01:24 case now I subsequently bought a lot 01:26 more Bitcoin after I after I bought a 01:28 car with Bitcoin but I so I have you 01:31 know more Bitcoin now than I did back 01:32 then but at the time that is what I did 01:35 in the moment before I had time to go 01:37 liquidate other stuff and buy more 01:38 Bitcoin so um that sort of thing is 01:41 happening all over the world most of the 01:44 things that affect the price of Bitcoin 01:47 have to do with people's immediate 01:49 preferences for different assets so when 01:52 people are scared they go back to their 01:55 Roots back to the US dollar now does the 01:59 US dollar it doesn't make any sense to 02:01 go back to the US dollar because that's 02:03 the thing the government makes out of 02:04 thin air but when people are scared they 02:07 don't think rationally they think what 02:09 could I get into that gives me the 02:11 highest feeling of comfort now for 02:14 somebody who's been in Bitcoin a long 02:15 time like me the the US dollar does not 02:19 give me Comfort it gives me heartburn 02:23 but and Bitcoin gives me Comfort Bitcoin 02:26 is the thing that when it's when I hold 02:28 it I feel like okay I'm good I can 02:31 handle life's uncertainties the 02:34 uneasiness that comes with not knowing 02:37 what life will throw at you I feel 02:39 better about that uneasiness if I have 02:42 more Bitcoin but most people are not as 02:45 far into the journey as I am which means 02:48 for most people their sense of 02:50 uneasiness or their sense of how much 02:52 comfort they have with the uncertainty 02:55 of life goes up when they are holding US 02:57 dollars so when they get scared they 02:59 dump other things to get US Dollars 03:02 which on one hand is rational because US 03:05 dollars are what is guaranteed to be 03:07 able to buy you groceries now it buys 03:09 You Less groceries every single day but 03:12 it does buy you groceries relatively 03:15 consistently whereas because Bitcoin is 03:17 so early in its adoption cycle it's the 03:20 the price is relatively volatile in US 03:22 Dollars now one day that won't matter 03:24 because groceries will be priced in 03:26 Bitcoin and so the most certain thing in 03:28 the world will be to hold Bitcoins but 03:30 we're probably you know 10 or 20 years 03:32 from that we're at least one or two 03:34 decades from that time and in the 03:36 interim time between now and when 03:38 groceries are priced in Bitcoin people 03:41 will feel more comfortable when they 03:43 hold something that is what they pay 03:45 their rent in which is US dollars or 03:48 what they P pay their mortgage in which 03:50 is US dollars or what they buy their 03:51 groceries with which is US dollars so in 03:54 the future those things will all be 03:56 priced in Bitcoin but in the near term 03:59 most for most people those things are 04:00 priced in US Dollars and because they're 04:02 priced in US Dollars that is the thing 04:04 people feel like they have to have in 04:06 their hand even if they know it's losing 04:08 value by between 4% and 9% or you know 04:13 on a bad year as high as the low you 04:15 know teens as far as how much it's 04:17 losing value um they still know that hey 04:20 I can buy groceries or I can pay my 04:22 mortgage or I can pay my rent with these 04:25 things called called US Dollars even if 04:27 they're losing double digits of their 04:29 value you know over the course of a year 04:31 they know they can pay their mortgage 04:33 next month with US dollars that will 04:35 probably only have lost a few percentage 04:38 points or a couple percentage points of 04:40 their value between now and when their 04:42 mortgage is due in the case of Bitcoin 04:44 it's more volatile than that it could 04:45 have lost 10% could have gained 10% 04:47 could have gained 20% could have lost 04:49 20% in the near term the near term is 04:51 volatile so um because everything is 04:54 interconnected when people panic and 04:56 they're scared like they are right now 04:58 with the stock market they sell things 05:01 and when they need more of something 05:04 than Bitcoin they sell Bitcoin to get 05:05 more of that thing and often times for 05:07 people is they panic and they want US 05:09 dollars because they don't know they 05:12 don't have the knowledge of Bitcoin 05:13 sufficient for them to understand that 05:15 Bitcoin is a more certain set to own 05:19 than US Dollars even if Bitcoin is more 05:20 volatile in the near term it is far more 05:23 certain and retains its value much 05:25 better in the long term but a lot of 05:27 people don't think longterm they think 05:29 shortterm and that's all they're focused 05:31 on um same with stocks and bonds and and 05:33 in the business world in the business 05:35 world if suddenly Everybody's scared of 05:38 the stock market they're not sure if 05:39 they'll be able to do a stock issuance 05:41 they're not sure if they'll be able to 05:43 fund you know debt payments that are due 05:45 on you know corporate buildings um then 05:49 they sell what they can not necessarily 05:51 what they want to and so they they clear 05:54 their balance sheet of stuff they sell 05:55 stocks they sell bonds they sell Bitcoin 05:58 they try to get into whatever the asset 05:59 is is that they know they will be able 06:01 to pay debt payments with and again for 06:04 a lot of people that's the US dollar in 06:06 the future it'll be Bitcoin in the near- 06:07 term it's US Dollars um but even in 06:10 spite of all that Bitcoin keeps marching 06:12 Higher and Higher and Higher and it 06:13 keeps marching higher because enough 06:15 people understand what Bitcoin is that 06:18 they know that it is a safer bet to own 06:20 Bitcoin than to own the US dollar and 06:22 enough people are in a position that 06:24 they can handle the near-term volatility 06:26 so that they're comfortable holding 06:28 Bitcoin knowing that look I might have 06:31 to pay you know a contractor who's 06:33 working on something for my house I 06:35 might have to pay them with Bitcoin 06:37 that's 87,000 today uh or 88,000 but hey 06:42 I can pay a contractor with Bitcoin 06:44 that's 98,000 in a few weeks and in the 06:47 long term it goes up and in the long 06:50 term I'm winning more than I'm losing on 06:53 that volatility which means more often 06:56 than not it's up versus down and over 06:59 time that smooth out and over over time 07:01 you're up more than you're down uh on 07:03 bitcoin which means over time it makes 07:05 sense to hold more of your net worth in 07:07 Bitcoin as compar compared to US Dollars 07:11 um so because everything's interl lots 07:14 of people when Bitcoin dips they are 07:16 well first of all a lot of that is day 07:17 trading and people just doing stupid 07:19 stuff uh trying to time the market which 07:21 is cannot be done consistently so most 07:23 of those people are just losing money 07:24 anyway um but in the in in the uh in the 07:28 near term you get dayt Traders and 07:30 speculators and all of that in the 07:32 medium term you have a lot of people 07:34 panic selling any asset based on the 07:36 level of uncertainty they feel with the 07:38 global economy or with their business 07:40 plan or with their debt payments or you 07:43 know anything else they have and in the 07:45 long term assets tend to reflect the 07:48 value of that asset so Bitcoin is the 07:52 highest value money in the world uh 07:55 value as in the underlying value the 07:58 fundamental value of its monetary 07:60 properties is better than gold better 08:02 than the US dollar better than any of 08:04 the other you know 160 other Fiat 08:07 currencies Fiat means made up currencies 08:09 that other governments use Bitcoin has 08:11 better monetary properties than gold 08:13 Fiat currencies silver literally 08:16 anything else in the world it is the 08:18 scarcest thing that exists in the 08:20 universe right now is Bitcoin and 08:22 because of that the price eventually 08:25 gets reflected in the price of Bitcoin 08:27 because of that value but in the near 08:29 term it goes up and down because people 08:31 are emotionally driven creatures and 08:34 they buy and sell things for emotional 08:36 reasons whether it's not rational or 08:38 even if it is rational they sell what 08:40 they can not what they want to so they 08:42 may they may have an extra house that 08:44 they were renting out and they want to 08:46 dump the house but they can't sell it 08:48 because interest rates are so high that 08:50 they can't find a buyer because 08:51 everybody's mortgage would be like eight 08:53 or nine perc and so they might want to 08:55 sell a house but they can't so they sell 08:58 Bitcoin instead or they might might want 08:60 to sell a car but they can't or they 09:02 can't get anywhere close to the price 09:03 they think is reasonable so the one 09:05 thing that you can always sell that is 09:08 always liid liquid for a virtually 09:10 unlimited amount including on nights and 09:12 weekends literally from your phone or 09:15 from your bit key device stored deep in 09:18 cold storage somewhere at a safe Bank uh 09:21 Bank safe deposit box or wherever you 09:23 keep your valuables you know however 09:25 long it takes you to move Bitcoin around 09:27 uh which if it's secure should should be 09:29 longer in like real Time That's how fast 09:31 you can get liquidity that's how fast 09:33 you can get in and out of any other 09:35 currency in the world but that comes 09:36 with the downside of the fact that yeah 09:39 when people panic on a Saturday night or 09:41 something like that they can sell 09:43 Bitcoin even if they can't sell anything 09:45 else and when in a world that is 09:47 uncertain people freak out sometimes but 09:49 in the long term Bitcoin outperforms 09:51 everything else on the planet so it's 09:53 just a matter of time and it's just a 09:54 matter of whether you can stomach the 09:56 near-term volatility to get the reward 09:59 of the long-term massive worldwide 10:02 Bitcoin adoption so it continues to be a 10:05 great time to buy Bitcoin at a discount 10:08 and uh nothing leads me to believe that 10:10 Bitcoin will not become the future 10:12 monetary system of the world it is just 10:14 a matter of time and uh investment 10:17 rewards the patient have a great day 10:19 everyone thanks