Bitcoin has liquidity in spades

00:01 hey everyone let’s talk about liquidity
00:03 what is liquidity and why is it so
00:05 important in financial markets and all
00:08 you really need to know is that Bitcoin
00:09 has a ton of it so um if you you know
00:13 don’t don’t feel like you have to uh
00:14 watch this video unless you’re
00:15 interested in the concept uh because all
00:18 you need to know is that Bitcoin has it
00:19 but if you’re interested in more than
00:20 just Bitcoin has it well here’s a quick
00:22 primer okay so liquidity describes how
00:26 liquid a market is well what does that
00:28 mean well how liquid a market Market is
00:31 describes how much buying and selling of
00:33 anything happens in that market and how
00:36 much buying or selling in can happen in
00:39 that market uh before it affects the
00:41 price so for example um if you have at
00:44 the Jackson Mississippi Farmers Market
00:47 if you show up with a dozen eggs almost
00:50 certainly you’re going to be able to
00:51 sell them in a day if you show up with
00:53 10 dozen eggs you’ll probably be able to
00:55 sell them in a day if you show up with a
00:57 thousand dozen eggs you’re almost
00:59 certainly going home with your eggs a
01:01 bunch of your eggs that’s because the
01:03 Jackson Farmers Market has some
01:06 liquidity for eggs but not a huge amount
01:08 of liquidity for eggs now if you go to
01:10 Kroger and you want you sign a contract
01:13 to be become one of their egg suppliers
01:16 that absolutely you can drop off a
01:17 thousand dozen eggs and Kroger has a
01:20 huge amount of liquidity for buying and
01:22 selling of eggs um so all financial
01:24 markets and all markets work that way so
01:27 why does that matter well because now
01:29 and then you run into situations where
01:31 people are excited about an asset that
01:33 does not have liquidity so for example
01:37 uh typically after people get scammed
01:39 one of the ways that a scammer will try
01:42 to pacify the person is by sending them
01:44 a crypto token that has almost zero
01:47 liquidity but a very high price so for
01:50 example um I was talking to one person
01:52 who had been sent a crypto token that uh
01:55 and they almost always use coinbase
01:56 Wallet not the real coinbase app not the
01:59 real coinbase mobile app that I
02:00 recommend you use but something called
02:02 coinbase wallet which is a uh another
02:05 app that coinbase does that will
02:06 basically show you anything it’ll show
02:07 you I mean literally any token whe
02:10 whether it’s junk or not so one person I
02:12 was talking to said well look you know
02:14 the scammer sent me
02:16 $20,000 of this crypto token so all I
02:18 need to do is convert the $220,000 of
02:21 this crypto token into US dollars or
02:24 into Bitcoin and then I’ll basically
02:26 undo the scam and I told them I was like
02:28 yeah but the problem is that token does
02:30 not have liquidity the reason it looks
02:33 like it’s worth
02:34 $20,000 is because the scammers are
02:37 selling buying and selling that token
02:39 from each other a little bit every day
02:41 to keep the price at a certain level but
02:43 if you actually go and try to sell that
02:45 token uh you’re going to find out that
02:47 there’s no liquidity meaning you’re
02:48 going to find out that if you try to get
02:51 $220,000 for that token you have there’s
02:55 there’s no market for it again it’s the
02:57 equivalent of somebody saying well I
02:58 sold one egg for a dollar at the
02:60 mississipp farmers market so I can make
03:02 a million dollars by selling a million
03:03 eggs and the answer is no you can’t
03:05 because there’s not a million dollars
03:06 worth of liquidity uh for selling eggs
03:09 so in this case um the person I we had
03:12 to jump through some hoops because it’s
03:13 a pain the uh the scammers always make
03:15 it difficult to convert whatever they
03:17 send you back to US dollars because they
03:19 don’t want you to figure out that what
03:20 they sent you is actually trash so in
03:22 this case uh we jumped through those
03:24 Hoops I I guided them through how to
03:26 jump through the hoops and coinbase said
03:28 hey even though I’m showing the balance
03:30 at $20,000 in coinbase wallet again you
03:32 don’t have to worry about this because
03:34 you should not be using coinbase wallet
03:36 coinbase wallet is not something I
03:38 recommend I recommend coinbase the real
03:40 app where you can buy and sell Bitcoin
03:43 but anyway so we we got it figured out
03:45 and if they had tried to convert that
03:48 balance to US Dollars it was worth 17 so
03:51 the total liquidity for that scam token
03:54 even though the it looked like the token
03:56 was worth
03:57 $20,000 it was actually worth 17 if you
03:60 tried to sell it because again all you
04:02 know the only liquidity in that market
04:04 was the scammers selling themselves back
04:07 and forth a few thousand a day to try to
04:09 make the price look at it was at a
04:11 certain level now if you think something
04:14 that with
04:15 $20,000 that actual H is actually only
04:18 worth 17 cents for liquidity uh that is
04:22 actually not the worst I’ve seen so I
04:24 talked to one person and the scammer had
04:27 sent them a token it was like BTC M it
04:30 was like the the Bitcoin ticker symbol
04:32 but it had an m on the end of it and of
04:34 course each token was worth like
04:37 0000000000 something you know XYZ it was
04:40 basically each token was worth like
04:41 almost nothing but anyway the scammer
04:43 had sent them $17 million of this token
04:47 in an effort to shut them up and try to
04:49 keep them from going to authorities so
04:51 the scammer basically said look you sent
04:53 me tens of thousands of dollars of
04:54 Bitcoin in this case in both of these
04:56 cases the scam was that the scammer was
04:59 going to trade the Bitcoin and make them
05:01 more money so in both cases the scammer
05:04 came back when they asked for their
05:05 money back and the scammer said well hey
05:07 I can’t give you your money back in
05:08 Bitcoin because I’ve been trading it but
05:10 I can give you this super valuable
05:12 crypto token and all you have to do is
05:13 just sit on it and so in the first case
05:15 it was you know tens of thousands of
05:16 dollars in this case uh the the total
05:19 even though the amount that had been
05:20 scammed was also tens of thousands of
05:22 dollars the scammer sent them a token
05:25 that uh the sort of headline price in
05:27 coinbase wallet was $17 million
05:30 so for a period of time they actually
05:32 thought they had $17 million so they
05:35 reached out to me and said hey I think
05:37 I’ve been scammed but if I haven’t been
05:39 scammed I have $107 million well I was
05:43 sad to tell them that they indeed had
05:44 been scammed and they did not have $17
05:47 million and sorry but they just didn’t
05:50 have $107 million um so we jumped
05:53 through the Hoops because at this point
05:54 I’ve Gotten Good at jumping through the
05:55 Hoops to see if uh you know how much a
05:58 token is worth if somebody’s been
05:60 scammed now thankfully I’m proud to say
06:03 I’m not aware of anybody that follows me
06:05 or bought a Bitcoin at my recommendation
06:07 that has been scammed everybody I’ve
06:09 ever talked to that’s got scammed got
06:11 scammed before I started you know doing
06:14 Facebook videos and posting about
06:16 Bitcoin they all got scammed before that
06:18 based on bitcoin that they bought of
06:20 their own accord and based on the fact
06:23 that they thought they were going to um
06:25 you know get more Bitcoin by sending
06:28 their Bitcoin to somebody on uh usually
06:30 it’s WhatsApp by someone who reaches out
06:32 to them on WhatsApp offers to trade the
06:34 Bitcoin and make them more Bitcoin so in
06:36 every case these are people that are
06:37 that were not following my advice they
06:40 were not doing what I say to do they
06:42 bought the Bitcoin in both cases uh in
06:44 the both the two cases I’m talking about
06:46 they bought the Bitcoin before I was
06:47 even talking about Bitcoin and they um
06:51 you know they did what I tell people
06:53 never to do which is they sent their
06:54 Bitcoin to someone who promised they
06:56 were going to trade the Bitcoin and make
06:57 it worth more so this person supposedly
06:59 has 7 million of this
07:02 btcm token on it was like Capital BTC
07:05 and the lowercase like M and if you look
07:07 it up it’s like some convoluted word
07:09 salad of what it’s this token supposed
07:11 to do so I told the guy I was like well
07:12 sadly 107 million is probably only worth
07:15 17 cents the last guy I helped with the
07:17 exact same problem and his his like scam
07:20 token was like ethm or something like
07:23 that it was like ethereum but it was
07:24 like eth with a lowercase M and of
07:26 course it traded at you like a tiny
07:28 fraction of one penny and blah blah blah
07:30 so anyway I told the guy I was like well
07:32 your 107 million is probably worth 17
07:34 cents but if you’re up for it we can
07:36 jump through the hoops and we’ll find
07:38 out exactly what it’s worth um so we did
07:40 that we jumped through the hoops and It
07:41 ultimately came back uh when we clicked
07:43 the you know convert now our preview we
07:46 didn’t actually do it I told them don’t
07:48 actually do it because we’re we need to
07:49 go to law enforcement with this and and
07:51 both of them did but I was like so don’t
07:53 actually convert it just click preview
07:55 so that you’ll find out how much money
07:56 you’ll actually get if you do convert it
07:59 and so he clicked preview and sent me a
08:02 screenshot and coinbase said you know
08:06 this is not a liquid Market expect
08:07 massive slippage the total amount of
08:11 balance that will be credited to your
08:12 account if you move forward by moving
08:15 107 by uh converting $107 million of
08:19 this crypto token into US dollars is one
08:22 penny and I told him uh well that’s sad
08:25 that’s 117th what I thought you were
08:26 going to get I thought you were going to
08:27 get 177 cents but you’re actually
08:30 getting one single solitary penny so
08:33 that was the my my experience with the
08:35 least liquid token I’m I’ve I’ve ever
08:39 seen was $107 million of it that was
08:42 worth one penny and again it was worth
08:45 one penny because every day the hackers
08:46 got online uh or scammers I should say
08:49 the scammers got online transferred a
08:51 few bucks back and forth to each other
08:52 so that the market place looked like the
08:55 pr the token was priced at a dollar But
08:58 ultimately it obviously was not so you
08:60 know scammers will do that they’ll
09:01 they’ll create like a fictitious
09:02 cryptocoin and then every day they’ll
09:04 they’ll log in online they’ll trade $1
09:07 of it to each other the next day they
09:08 trade it back the next day they Trade It
09:10 Forward the next day they trade it back
09:11 they just trade it back and forth
09:12 between themselves and that way it looks
09:15 like it has a price and they’re like
09:16 look the token is worth 107 million and
09:18 the truth is no two scammers are just
09:21 trading a dollar of it back and forth
09:22 every day to try to make it look like
09:24 that supports the price but then when
09:25 you try to convert what looks like $107
09:28 million of this um you know you find out
09:31 it’s only worth a penny because there’s
09:32 no actual market for it um basically the
09:35 Market’s like a dollar a day um but in
09:37 this case it was even worse than that it
09:38 was worth one penny uh for $107 million
09:41 of this coin and the only reason it’s
09:43 even worth that is the scammers were
09:44 bidding one penny hoping that they could
09:46 get all that scam coin back so that they
09:48 didn’t have to invent a new scam coin
09:49 for the next guy so um so in both cases
09:52 people lost tens of thousands of real US
09:54 Dollars and in one case it looked like
09:57 the scam token was $220,000 that was
09:59 really worth
10:00 and in the other case it was uh $107
10:03 million that was really worth one penny
10:06 now does this matter in the real world
10:08 it actually does because that Dynamic
10:10 also applies to legitimate things not
10:12 just scams so I told the story in an
10:15 earlier video earlier this week about um
10:18 a company stock that I sold I had six
10:20 figures of this company stock I bought
10:22 in 2021 and when I went online to sell
10:25 it on Fidelity um I uh I sold I had like
10:29 7,000 shares of it which is you know
10:31 irrelevant but um I had 7,000 shares and
10:34 I sold a th000 shares and the price
10:37 dropped by like uh the the overall price
10:40 of of this company uh the share price
10:43 dropped by I guess what was it it was
10:46 like 3% and it literally me selling a
10:50 th000 shares at a low price made it drop
10:53 you know 3% off a market cap of like
10:55 $700 million so whatever 3% of that it
10:58 dropped like I sold like barely any you
11:01 know for every thousand doll I was
11:03 selling the market you know the price
11:06 was dropping by like you know a million
11:08 dollars I mean it was it was a crazy
11:10 ratio and so I sold a th000 shares the
11:13 price dropped by by you know 3% I sold
11:17 another thousand shares the price
11:18 dropped by another 3% I I dropped you
11:21 know I sold another thousand shares the
11:22 price dropped by 6% I was like this is
11:25 crazy I’m dropping the price of the
11:27 entire market cap of this company is
11:29 dropping by like a $100 million because
11:32 little old me is selling a tiny little
11:35 share now I had bought a tiny little
11:37 share they had sold $75 million of their
11:40 stock so the total amount of stock out
11:42 there that could sell was $75 million
11:46 and I was selling just a tiny little you
11:48 know very very very extremely low six
11:50 figures amount of this stock so I was T
11:53 selling basically a little fraction of
11:56 one of the $75 million and I’m causing
11:59 the price of this thing to go down which
12:01 was not my intent I had no intention of
12:03 altering the price I thought the
12:04 marketplace for that stock was Liquid
12:07 enough that I could sell it without
12:09 altering the price but as soon as I saw
12:11 that I was like well I don’t have a
12:13 choice here I want to sell this stock so
12:14 I can buy more Bitcoin and I I can’t
12:17 help it that every time I hit sell you
12:19 know on a th000 shares and then 2,000
12:21 shares and then 1500 shares and then
12:23 another th000 and then another 2,000 or
12:24 whatever it was it was like five
12:26 different purchases the price of the
12:28 company dropped by like 3% % every time
12:30 I hit sell and I was watching I was
12:32 literally watching the stock price on
12:34 the stocks app in apple and I was like
12:37 this is crazy like I’m just trying to
12:39 exit my position here I’m just trying to
12:40 sell the stock I don’t want the price to
12:43 change it’s ridiculous that the price is
12:45 changing but that just shows you that
12:47 there was just almost no trading
12:49 activity for that and so that there was
12:51 just not enough people who wanted it at
12:53 one price or the next price or the next
12:55 price so every time I hit sell the price
12:58 dropped to the next lowest denominator
12:60 of people that were willing to buy it at
13:01 that price so uh the good news is
13:04 Bitcoin has tons of liquidity Bitcoin
13:06 has tons of billions of dollars of daily
13:10 liquidity which means today I was
13:12 talking to somebody um a few weeks ago
13:15 and they said yeah well what happens if
13:16 somebody you know sells five or10
13:18 million of Bitcoin doesn’t it move the
13:20 price I was like no no no no no not five
13:23 or 10 million you know you can you know
13:26 you can buy or sell right now in Bitcoin
13:29 up to probably $5 billion before it
13:32 moves the price I mean you have to have
13:34 a massive amount of money now that’s
13:36 still small I mean still nation states
13:37 major nation states are still looking at
13:39 Bitcoin and saying it doesn’t have
13:41 enough liquidity to be a strategic
13:43 Reserve because we need to be able to
13:44 come in and out of 10 billion on a day
13:48 without it affecting the price and the
13:49 truth is Right now10 billion does move
13:52 the price as the price gets higher and
13:53 higher and higher you know in the early
13:55 days $10 would move the price then it
13:57 was a th you know then it was 100 then
13:58 it was a th000 then it was 10,000 then
13:60 it was a million you know 100,000 then
14:02 it was a million then it was 10 million
14:03 then it was 100 million then it was a
14:05 you know billion then it was you know
14:06 now we we’re basically at where it’s
14:08 like no you you really need to buy or
14:10 sell 10 billion dollar in somewhere
14:13 between a day and a week in order for
14:15 the price of Bitcoin to reflect that at
14:17 all meaning you’re either buying and
14:19 it’s pushing the price up a bit or
14:20 you’re selling and it’s pushing the
14:21 price down a bit but what you want is to
14:23 be able to however much you have to be
14:24 able to sell or buy as much as you want
14:27 with no impact on the price that is what
14:29 a W Market is you can buy or sell as
14:31 much as you want and there’s no impact
14:33 on price that’s what you want so anyway
14:36 thought I would throw that out there so
14:38 liquidity is how much buying or selling
14:40 or how much appetite there is for buying
14:43 and selling anything on any given day
14:45 and deeply liquid markets uh it’s
14:49 important to have a deeply liquid Market
14:51 in order to uh you know know that you
14:54 can buy or sell anything scam tokens are
14:57 extraordinarily non-liquid
14:59 and even this very little company that
15:01 had just gone public um you know they
15:04 had almost zero not zero liquidity but
15:06 they had such low liquidity that even a
15:08 very small shareholder like me could
15:11 move the price um now there could have
15:13 been other factors at play maybe the
15:14 price was moving every time I hit Soul
15:16 cell even though I didn’t intend it to I
15:18 don’t know but I don’t think there was
15:20 anything else at play because it was
15:21 like a one toone direct correlation and
15:24 I’m like I’m just trying to get out of
15:25 my position here like it’s not my fault
15:27 the price is moving um so anyway let’s
15:29 say um you get into this with you know
15:32 sort of smaller coins uh Stupid coins
15:35 that nobody should own anyway um but you
15:37 don’t have this problem with Bitcoin
15:38 because Bitcoin has tens of billions of
15:40 dollars of daily liquidity and in the
15:42 future it will be you know hundreds of
15:45 billions of dollars of daily liquidity
15:48 when the asset class is even bigger than
15:49 it is today so that’s what liquidity is
15:52 you don’t really need to understand that
15:53 unless you’re just curious uh all you
15:55 need to know is Bitcoin has a ton of
15:57 liquidity and whatever stupid coin that
15:59 someone’s telling you about doesn’t have
16:01 anywhere close to that liquidity so
16:04 don’t chase stupid stuff because you
16:06 know real stocks and real bonds and real
16:08 Bitcoin have real liquidity meaning you
16:10 can buy and sell anytime you want
16:12 without moving the price unless you’re a
16:14 massive Mega whale which I am not um but
16:18 a lot of these scam coins and altcoins
16:20 and stupid coins don’t work that way and
16:22 the liquidity really does matter and
16:24 they don’t have it and that becomes a
16:26 huge problem as soon as you actually
16:27 want to buy or sell some so have have a
16:29 great day everyone always a pleasure and
16:31 I’m here for anything you need thanks