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