You can handle ANY amount of bitcoin volatility if you adjust the amount of bitcoin you own

00:02 everyone I'm driving the 2010 Honda 00:04 Odyssey today with 229,000 00:07 miles on it because one of our other 00:09 cars in the shop so my wife's driving my 00:11 Tesla and I am driving the family van 00:14 but let's talk about adjusting your 00:16 position size so you can handle any 00:18 amount of volatility so with any asset 00:21 there is volatility 00:23 with that volatility the amount of that 00:25 asset that you own for most people 00:28 determines how much of that volatility 00:31 they can handle so what do I mean by 00:33 that so sometimes I talk to Bitcoin 00:35 people about Bitcoin and they're like 00:37 "It's too volatile for me." Okay but 00:39 let's think about that is it too 00:40 volatile for you is it too volatile for 00:43 you to have $1 of your net worth in 00:46 Bitcoin the answer is no everybody in 00:49 the world can handle volatility on one 00:54 US dollar worth of Bitcoin everyone you 00:57 know it can drop by 50% and you've only 00:59 lost 50 cents it can go up by a double 01:02 and you from $1 to $2 everybody can 01:05 handle that so anybody that says that 01:07 Bitcoin's too volatile for them that's 01:09 not what they actually mean what they 01:11 mean is Bitcoin is too volatile for them 01:14 to own a huge amount of it well great 01:16 then owed less than a huge amount of it 01:18 so if you can handle the the volatility 01:21 of one US dollar of Bitcoin going up and 01:24 down then that means it's not too 01:26 volatile for you then the question is 01:29 well how much more Bitcoin than$1 of 01:31 Bitcoin should you own that you can 01:34 handle maybe it's $50 maybe it's $500 01:37 maybe it's $5,000 maybe it's $50,000 01:40 maybe it's $500,000 it could be anything 01:43 it depends on your net worth so in my 01:45 case I slowly ramped up my ownership of 01:49 Bitcoin to ultimately 100% of my liquid 01:51 assets but I did that over eight years 01:54 over eight years I became more and more 01:56 comfortable with Bitcoin as an asset 01:58 class i got more and more comfortable 01:60 writing the ups and downs i read books 02:02 like VJ Boyott's book The Bullish Case 02:05 to Bitcoin uh again I highly recommend 02:08 that book you'll you'll feel much better 02:10 about the ups and downs of of Bitcoin if 02:12 you read VJ Boya's book The Bullish Case 02:16 for Bitcoin B U L L I S the bullish case 02:20 for Bitcoin which is on audible.com it's 02:22 on Amazon.com you know wherever you read 02:25 it's there for you 02:27 so uh I I highly recommend you read that 02:30 book again if you're looking at the 02:32 price of Bitcoin and I've done quite a 02:33 few videos or multiple I should say 02:35 multiple videos this week where I've 02:37 said "Look I think there's a more than 02:39 70% chance that we'll get a big 02:40 parabolic rise in the next 6 to 12 02:43 months and a less than 30% chance that 02:46 we'll see a significant price correction 02:48 of greater than 30%." Um so the odds are 02:51 in your favor but can you handle that 02:53 and if the answer is no you can't handle 02:57 30 40 50% price correction even though I 02:59 think you know the bigger numbers on 03:01 there are less likely the bigger you go 03:04 but if you can't handle that the easy 03:06 solution is great adjust your position 03:09 size own the amount of Bitcoin that lets 03:12 you ride out anything so um for me again 03:16 I'm comfortable riding the volatility 03:18 with 100% of my liquid assets but very 03:21 few people are in that boat uh the vast 03:24 majority of people are in the boat where 03:26 they're comfortable riding with a 03:27 significantly smaller amount of their 03:29 liquid assets or they're comfortable 03:31 riding that retirement that volatility 03:33 with a retirement account that they're 03:35 not planning on using for many years 03:37 into the future or they're riding that 03:39 volatility with assets that they have 03:42 earmarked for sort of higher risk higher 03:45 reward sort of investments um in my case 03:48 again I'm at 100% with everything that 03:50 means 100% of my my uh my retirement 03:53 funds that means 100% of my emergency 03:55 reserves that means 100% of my savings 03:57 100% of everything's in Bitcoin there's 03:60 been some Rachel manages some some of 04:02 our assets that are in Bitcoin but I 04:04 don't have any legal right to those 04:05 assets and uh no legal like those are 04:09 her assets to manage and that way we 04:11 don't go starving if somehow I mess 04:13 everything up um but anyway so I'm at 04:15 100% but that also means I know I can 04:17 handle the volatility almost 100% 04:20 because I've been in Bitcoin for eight 04:22 years i know what it's like i've lived I 04:24 lived through the bare market which 04:26 means down market i lived through the 04:27 bare market uh after 2017 i lived 04:30 through the bare market after 2021 i 04:33 know what those feel like i know I can 04:34 take it i know that Bitcoin always 04:36 recovers can handle it i know I can 04:39 handle it and because I know I can 04:41 handle it I can handle having 100% of my 04:43 assets in Bitcoin but a lot of people 04:45 are not in that case they they you know 04:47 the amount of money that they can handle 04:50 a 30% 40% 50% price drop is just a lot 04:53 less than 100% of their assets so as you 04:57 think about the future just think what 04:59 can I handle how much of this roller 05:00 coaster can I really take um and it's 05:04 the equivalent of this like what if you 05:05 you're getting on a roller coaster and 05:07 you ask the person you who's in charge 05:09 like "Hey am I going to end up with my 05:11 assets way higher at the end of this 05:13 roller coaster than where I started?" 05:15 And their answer is "Oh yeah this is a 05:17 great roller coaster everybody loves it 05:19 love it at the end." And but here's the 05:21 caveat to this roller coaster so 05:23 whatever high you go you have to drop 05:25 50% of that right so they're like "Okay 05:28 how high do you want to go?" If the 05:30 roller coaster goes up 20 feet it's 05:31 going to drop 10 feet before it gets to 05:33 the end at 30 feet if you know or let's 05:36 say it gets to the end at 40 feet so if 05:38 you go up 20 feet you're going to drop 05:39 10 feet and you'll end up at 40 feet up 05:41 well that's some great returns but it 05:43 means you got to drop 10 feet if they're 05:46 somebody somebody inevitably on the 05:47 roller coaster is like you want to go up 05:49 thousand feet it's like really do you 05:52 can you really handle a 500 foot 05:54 continuous drop you know you might throw 05:57 up your Bitcoin and a lot of people 05:59 think they can handle volatility that 06:01 they can't and so they throw up their 06:03 Bitcoin and a good way of thinking about 06:04 it is like a roller coaster it's like if 06:06 you go up 1,000 feet and then you drop 06:09 500 ft and then you go to 4,000 ft well 06:13 you know you're way up you're way way 06:14 way up at the end the question is did 06:15 you throw up your Bitcoin on the way 06:17 because if you couldn't handle that down 06:20 uh that downstroke and you check it out 06:22 and you sold your Bitcoin when it was 06:24 down or you got forced to sell your 06:26 Bitcoin it was when it was down because 06:28 you were desperate for liquidity you had 06:30 a home sold repair or a vehicle problem 06:33 or you needed a new roof on your house 06:35 or there's like a million different 06:36 things and you had no other place to get 06:38 capital you might get forced to throw up 06:40 your Bitcoin even if you don't want to 06:42 even if you're at the 500 ft drop of the 06:45 roller coaster you're like "My stomach's 06:47 rock solid and I'm loving every minute 06:49 of it." But if you have a major you know 06:51 need for capital that forces you to 06:54 liquidate Bitcoin when it's down because 06:56 you have no other source of uh you know 06:58 no other way of getting capital in an 07:00 emergency then you might throw up your 07:02 Bitcoin even if your stomach can handle 07:03 it your finances that may not be able to 07:06 so as you think about the future of 07:07 Bitcoin make sure your stomach can 07:09 handle it meaning you're not going to 07:10 check it out and sell when it's down um 07:13 and make sure that your finances can 07:15 handle it and you're not going to be 07:17 forced to sell Bitcoin in a price dip 07:19 now again I think there's a greater than 07:21 70% chance that we're going to get a big 07:23 price rise before that dip but there's a 07:26 less than 30% chance that we get that 07:28 dip and before a huge price rise and 07:31 just make sure you can handle that so 07:33 the good way to think about it is like a 07:34 roller coaster that ends up way higher 07:36 than where it started everybody wants to 07:38 be at the end of that roller coaster the 07:40 question is are you going to throw up 07:41 your Bitcoin on that roller coaster 07:44 before you get to the top at the end and 07:46 if the answer is you might then you 07:48 might want to sort of flatten that 07:50 roller coaster for yourself out a little 07:51 bit by adjusting your position size 07:54 meaning look at how much Bitcoin you own 07:56 look at how much everything else you own 07:58 and say can I handle the volatility with 08:00 this amount of Bitcoin ownership or am I 08:02 going to throw up my Bitcoin if you 08:04 think you might throw up your Bitcoin 08:06 then adjust your position size to that 08:09 until you have the amount of Bitcoin 08:11 that you feel good about that you can 08:13 ride basically anything if you own an 08:15 amount of Bitcoin that you can ride 08:16 basically anything then you're good if 08:18 your finances are not going to force you 08:20 to throw up your Bitcoin and your 08:22 stomach is not going to force you to 08:23 throw up your Bitcoin because it starts 08:25 dropping and you just can't take it and 08:26 you end up selling it when it's down 08:28 then um you know then adjust your 08:30 position size another consideration is 08:32 what is your cost basis your cost basis 08:35 is how much you bought your Bitcoin for 08:38 typically the stomach people have is 08:40 heavily dependent on their cost basis so 08:42 if you bought Bitcoin and your cost 08:44 basis which means the average price of 08:46 all of the Bitcoin you bought it's the 08:48 same for other assets if you buy you 08:50 know Amazon and Apple or Tesla stock at 08:53 all different prices your cost basis is 08:56 how much total did you buy divided by 08:59 you know how many total shares did you 09:02 buy so it's basically the blended 09:04 combined price of all of the asset you 09:06 own so same with Bitcoin if you bought 09:07 Bitcoin at a bunch of different prices 09:09 the question is yeah but what was the 09:10 average price of the Bitcoin you bought 09:13 taking into account the fact that if you 09:15 bought more of it at a higher price and 09:16 less of it at a lower price the average 09:19 price is going to be closer to the 09:20 higher price because you bought more at 09:22 the higher price than less at the you 09:23 know less at the lower price so um 09:25 anyway if you I won't run the math but 09:27 you know and if you're not sure what 09:28 your cost basis is shove it into chat 09:30 and GPT and chat GPT will tell you what 09:32 your cost basis is just tell it I bought 09:34 this much Bitcoin at this and I bought 09:36 this much Bitcoin at that and you know 09:38 you just put it all in chat GPT and ask 09:40 it what your cost basis is and it will 09:42 tell you what your cost basis is but 09:44 depending on your cost basis the lower 09:45 your cost basis is typically the 09:47 stronger your stomach because if we're 09:49 sitting up here at $106,000 Bitcoin and 09:52 your cost basis is down at 60,000 or 09:55 $70,000 a bitcoin you could typically 09:57 handle a lot of volatility because you 10:00 know Bitcoin drops from 106 down to 85 10:03 and you're like well I'm still up you 10:05 know so so typically the higher the more 10:08 you are up the more you can handle the 10:10 volatility because you're you know you 10:13 feel like well I'm still up i may not be 10:15 up as much but I'm still up you know so 10:18 typically the lower your cost basis the 10:20 more you can handle your volatility uh 10:23 the the problem comes with a parabolic 10:25 rise so let's say we run from 106,000 10:28 per coin we run up to $180,000 per coin 10:32 well what's going to happen is as that 10:34 as the pace 10:36 price acceleration accelerates in a 10:39 parabolic rise which a parabolic rise 10:41 means it goes up and then it goes up 10:42 faster and then it goes up faster and 10:44 then it goes up faster which typically 10:46 happens about every four years in a 10:48 parabolic rise what happens is fear of 10:50 missing out kicks in FOMO and people end 10:53 up buying more and more and more Bitcoin 10:54 as the price accelerates they buy more 10:56 and more and more Bitcoin this is 10:58 accelerating and what that means is they 11:00 end up with a cost basis of you know as 11:02 it runs up to 180,000 a coin they end up 11:05 with a cost basis of $160,000 or 11:08 $170,000 per coin well what happens is 11:11 then when the price drops from 180 down 11:13 to 120 the people up there with a cost 11:16 basis of 160 or 170 they lose their 11:19 Bitcoin they can't take it they see that 11:22 Bitcoin they bought at $160 or $170,000 11:24 a coin coin is dropping to 140 and then 11:28 130 and then 120 and typically they just 11:32 throw up their Bitcoin they can't they 11:34 can't handle it and so Bitcoin they 11:35 bought at 170 they're selling at 130 and 11:39 then the market bottoms out at 120 for 11:41 example i'm just making up numbers here 11:43 market bottoms at 120 climbs back up to 11:47 I don't know 350,000 or 500,000 or 11:50 whatever it is on the next price climb 11:52 um over the next couple years and they 11:55 were one of the people that lost money 11:57 because they bought at 170 and they sold 11:59 at 130 they popped at 180 and it was at 12:03 120 and they threw up their Bitcoin 12:05 because they couldn't handle it and they 12:06 couldn't handle it because they were 12:08 late to getting on the Bitcoin train 12:10 they bought in a parabolic rise they 12:12 ended up with a high cost basis and 12:15 their stomach could not handle the price 12:17 correction off of a high off of that 12:19 cost basis again it's a lot less of a 12:21 problem if you bought Bitcoin out at 12:23 50,000 60,000 70,000 um again I have 12:27 Bitcoin that I bought for as recently as 12:29 a you know a week or two back for 12:31 109,000 and I think I bought some at 12:33 111,000 but again I don't care my cost 12:36 basis is down in the low 30,000s so 12:39 we're never going to see the low 30,000s 12:41 ever again in human history so you know 12:44 part of the reason I can handle anything 12:45 is my cost basis is low enough even 12:48 though I have some Bitcoin that I bought 12:50 at 109,000 and 111,000 it's a small 12:53 percentage of the total Bitcoin I bought 12:55 and so the total Bitcoin I bought the 12:58 including the average again Bitcoin at 13:01 109 and 111 the average Bitcoin I bought 13:04 is probably is in the low 30,000s and 13:07 that's because I bought coin as cheap as 13:09 6,400 i bought you know a decent amount 13:12 of Bitcoin around $9 to $10,000 per coin 13:16 and then I bought even more Bitcoin at 13:17 20,000 30,000 40,000 50,000 um enough 13:22 Bitcoin uh that the average ends up 13:24 being in the low 30,000s which means 13:26 since I have 100% of my liquid net worth 13:28 incoin and since my cost basis is in the 13:31 low 30,000s it means I've tripled my 13:34 entire liquid net worth now that does 13:36 not include my stock in Prosper 13:40 which is that's liquid assets so I don't 13:42 I don't count that in that the equation 13:44 but just for liquid assets which is 13:46 stocks bonds cash anything that you can 13:48 buy and sell you know within a 13:50 relatively short period of time for all 13:52 of those assets which are called liquid 13:53 assets i've more than tripled my liquid 13:56 net worth 100% my liquid net worth 13:59 because I've got a cost basis in the low 14:01 30,000s uh even though I'm always buying 14:03 Bitcoin at all prices I'll be buying the 14:05 tops forever you know no matter what the 14:07 price of Bitcoin is when my paycheck 14:08 hits every two weeks I buy Bitcoin it is 14:11 completely irrelevant what the price is 14:13 so the higher it goes I will be one of 14:15 the people that are buying in a 14:16 parabolic rise but I'm not buying like 14:18 huge chunks of my net worth because I 14:20 already have 100% in Bitcoin so the only 14:23 money I'm going to have to buy Bitcoin 14:25 in a parabolic rise is new money that 14:27 shows up you know from refunds I get 14:30 from taxes or investments or something 14:32 like that new money that shows up which 14:34 I will buy Bitcoin with or my paycheck 14:36 every two weeks but regardless a total 14:39 amount of all the Bitcoin I've ever 14:40 bought that's a relatively small percent 14:43 which means my cost basis is going to my 14:45 cost basis will creep up over time from 14:47 the low 30,000s that as I buy Bitcoin up 14:50 at you know 109 111,000 it will slowly 14:53 pull that cost basis it's still going to 14:56 be so far you know my cost basis is 14:58 still going to be so far below the 15:00 current price of Bitcoin that it makes 15:01 it easy to handle absolutely anything 15:04 now if somebody came to me and said 15:05 "Okay at 106,000 a coin Joel I've never 15:09 bought any Bitcoin before and I'm 15:11 planning on going all in." I would tell 15:13 them "You probably can't handle that you 15:15 probably cannot handle a $106,000 cost 15:18 basis with your liquid net worth you can 15:22 over time but you need to get 15:23 comfortable with Bitcoin you need to 15:25 understand Bitcoin you need to 15:26 experience you know just this year we 15:28 had uh 30% price drop and a 33% price 15:32 drop so we ran up to 109 and dropped to 15:37 what it was like a 30% drop and then we 15:39 ran up to like 112 15:41 I forget anyway regardless I think just 15:44 this year we've had a price correction 15:45 of 30% and another price correction for 15:48 like 31 uh 33% i think the biggest was 15:51 33% um I know since November let me put 15:54 it this way since early November we've 15:56 had one price correction of 30% and 15:58 another price correction of 33% 16:01 so I feel a lot better if people have 16:03 lived through that if they're investing 16:05 in Bitcoin now because they know what 16:06 that's like they know that they're not 16:08 going to throw up their Bitcoin on a 33% 16:11 price correction now that doesn't mean 16:12 they're not going to throw up their 16:13 Bitcoin on 40% or 50% price correction 16:16 even though I don't think that's coming 16:17 if if that does come I think it will be 16:19 after a huge rise i can see you know if 16:22 we go up to 220,000 yeah I can 16:24 absolutely see a 50% price correction 16:26 down to 110 so if you run up to 220 and 16:29 crash to 110 that's still higher than 16:31 today's price and will probably only be 16:33 at 110 like a matter of days or a matter 16:36 of weeks will slowly start climbing 16:38 again just like it did after the big 16:40 crash in 2022 caused by FTX and Celsius 16:44 and Voyager and Three Arrows Capital a 16:46 bunch of stupid people doing a bunch of 16:47 stupid stuff um that dragged the price 16:49 of Bitcoin down because a bunch of 16:50 people threw up their Bitcoin because of 16:52 bad you know Ponzi schemes and stupid 16:55 business practices and vast amounts of 16:57 borrowed money and all that so the line 17:00 is the same buy Bitcoin with money that 17:03 you can stomach the ups and downs make 17:05 sure you you understand you need to 17:07 understand enough about Bitcoin and how 17:09 it works and how it's used as money and 17:12 you know all of that you need to 17:13 understand enough of it that you're not 17:15 going to freak out when the price drops 17:16 so when for me when the price drops I'm 17:18 like no big deal it's just like the 17:21 market's not quite ready to adopt 17:22 Bitcoin 106,000 a coin yet it's fine it 17:26 will be it's just a matter of time some 17:29 at some point the market will be about a 17:32 million dollars per coin i'm absolutely 17:34 certain of that it's just a matter of 17:35 time if the price gets a little bit 17:37 ahead of itself for a little while and 17:39 it's not quite ready for 106,000 and it 17:42 pulls back before you know again I'm 17:44 saying a less than 30% chance but let's 17:46 say that less than 30% of chance happens 17:48 we get a price correction off of 17:50 $112,000 which is the most recent down 17:52 into the I don't know 80,000s or 17:54 whatever i'm like that's fine right 17:57 sitting here at $106,000 of Bitcoin the 17:60 market wasn't quite ready with the 18:01 adoption of Bitcoin to sustain a price 18:03 of 106 so we drop back into the 90s or 18:06 80s a little while i don't care it's 18:08 temporary pretty soon we'll be above 106 18:10 again and then we'll be in the 110 then 18:12 120 then 130s it's just a matter of time 18:15 until the market adoption can sustain 18:18 the price of Bitcoin and so I can handle 18:20 those price drops i understand Bitcoin i 18:22 understand the technology i can handle 18:24 it i just want to make sure you can 18:25 because the only way you lose money on 18:28 Bitcoin is by selling it for less than 18:30 you paid for it and the way that happens 18:33 mostly with people is they get over 18:35 their skis they end up with a bigger 18:37 allocation than their stomach can handle 18:39 or than their finances can handle and 18:41 they end up being either forced to 18:43 liquidate Bitcoin at the price below 18:45 what they paid for it because their 18:47 personal finances could not handle the 18:49 volatility and they were forced to get 18:51 that liquidity but for something they 18:53 needed to repair a house or a car or you 18:56 know send a kid to college or whatever 18:57 it is but usually it's unforeseen things 18:60 if you're sending a kid to college 19:01 that's very predictable if it's 19:02 something unforeseen you're stuck 19:04 liquidating Bitcoin for less than you 19:06 paid for it if you have a you know 19:08 relatively high cost basis or because 19:10 they just can't handle it people just 19:12 see they buy at 106,000 they see a drop 19:14 and they're like 96 and they're you know 19:16 they're they're holding on they can 19:18 barely handle it it drops to 86 and 19:20 they're like I just can't take it 19:21 anymore bitcoin's not for me bought it 19:23 at 106 i can't take it you know it's 19:25 down at 86 i think it's going to zero 19:27 and they sell which of course as soon as 19:29 they sell the price turns right back 19:31 around and marches back up and you lose 19:34 money in Bitcoin and it happens every 19:35 cycle because people can't handle it so 19:38 the easiest way to handle Bitcoin is to 19:42 adjust your position size that means own 19:45 an amount of Bitcoin that you can handle 19:48 price corrections you can handle a 30% 19:50 40% even a 50% price correction if you 19:53 know I'm not saying it's going to happen 19:55 for a long time i'm saying we can go 19:57 through price corrections they do happen 19:59 think is less than 30% chance we get a 20:01 big price correction before we get a big 20:02 parabolic rise parabolic means it's like 20:05 just goes crazy um I think there's a 20:07 greater than 70% chance we get the huge 20:09 price rise before we get a major price 20:10 correction you need to be able to handle 20:13 it either way we can't predict the 20:15 future we don't know if Bitcoin goes up 20:17 before it goes down before it goes up or 20:19 if it goes up before or if it goes down 20:21 before it goes up and then more all we 20:24 know is that in the end it ends up being 20:26 the best investment you could possibly 20:27 be in but we don't know the exact timing 20:30 of that and we don't know if it goes 20:31 down before it goes up or if it goes up 20:33 before it goes down and then back up 20:35 again we don't know so you just make 20:37 sure you can handle anything and that 20:39 the amount of Bitcoin you own is not 20:41 going to get forced to throw up your 20:43 Bitcoin because your stomach can't 20:44 handle it or because your finances can't 20:46 handle it make sure your stomach can 20:48 handle it and your finances can handle 20:50 it and you'll be fine either way and 20:51 it's just a waiting because in the 20:53 future Bitcoin will be worth way more 20:54 than $106,000 per coin in the near term 20:58 greater than 70% chance I think we get a 21:00 big run less than 30% chance we get a 21:03 major price correction but I don't know 21:05 you don't know i don't know nobody knows 21:07 it's completely unpredictable same with 21:09 Amazon Apple Tesla Google Microsoft 21:13 Nvidia 21:14 the Magnificent Seven stock the seven 21:16 highest performing stocks in recent 21:18 history which are called the Magnificent 21:19 Seven if you were in any one of those 21:22 stocks you'd be experiencing the same 21:23 thing and nobody knows if you can you 21:25 know nobody knows if any of those stocks 21:27 are going to go up before they go down 21:29 or down before they go up if it's a 21:31 great company that continues to execute 21:33 well they will eventually be worth more 21:34 than there are today but that doesn't 21:36 mean there's not going to be a big price 21:37 correction between now and then and you 21:39 just got to be able to handle that so 21:41 okay that's all I got uh y'all have a 21:43 great day thank you everyone appreciate 21:44 it bye