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