Will a “gamma squeeze“ propel bitcoin to $150,000 per coin very quickly?

00:01 Will a gamma squeeze propel Bitcoin to
00:04 $150,000 per coin very quickly? The
00:07 answer is probably not, but it’s worth
00:09 knowing what it is and preparing
00:11 accordingly. Now, the short take here is
00:14 what should you do? Buy as much Bitcoin
00:16 as you can and hold on to it for as long
00:17 as conceivably possible. That’s the same
00:19 advice I’ve been giving from the
00:21 beginning of time. That’s what you do.
00:23 Um, but what is a gamma squeeze? Gamma
00:25 squeeze sounds like some fancy technical
00:27 jargon that somebody would throw around
00:29 to try to make other people feel dumb.
00:31 Obviously, you know, I would never do
00:33 that. So, I’m going to try to explain it
00:35 in the simplest terms possible. Okay.
00:37 So, if you invest in any asset, stocks,
00:40 bonds, real estate, um commodities,
00:42 gold, silver, soybeans, it doesn’t
00:44 matter. If you’re investing for the long
00:47 term, it’s called being long the asset.
00:50 O L O N G. So if somebody says I am long
00:54 Bitcoin that means that I am investing
00:56 hoping it will go up for the long term.
00:59 Now you can also be short an asset and
01:02 I’m not going to explain technically
01:03 technically how that works but you can
01:05 be short an asset by borrowing the asset
01:09 and hoping the price goes down and then
01:11 you return the asset at a lower price
01:13 later. You don’t need to understand how
01:15 that works other than to say if somebody
01:17 is short an asset or is shorting an
01:20 asset. That means that they are betting
01:23 the price is going to go down. Now, I do
01:25 not recommend anyone ever short any
01:28 asset ever. If you believe in something,
01:30 invest in it. That’s called going long
01:33 or being long the asset, which is great
01:36 because you can never when you’re long,
01:38 you can never lose more money than you
01:40 have invested. And you know, worst case
01:42 scenario, the price dips and you know,
01:45 you’re down, but who cares? You can wait
01:46 it out. If you are short an asset, often
01:49 you cannot wait it out because what
01:52 happens if you’re a short an asset is if
01:54 the price starts going up, you’re well,
01:57 let me let me cover this first. If you
01:59 are long an asset and the price drops by
02:01 50%, you’re down 50%. So what? You just
02:04 wait. There’s no way to end up
02:06 completely up a creek, you know,
02:08 screaming at the top of your lungs for
02:10 dear life because you’re losing so much
02:11 money. That does not happen if you’re
02:13 long an asset. But if you are short an
02:16 asset, your upside uh is sort of
02:20 leverage. You can you can make a lot of
02:21 money if the asset goes down, but your
02:24 downside is unlimited. meaning you could
02:27 end up on the hook for a huge amount of
02:28 money because if the asset goes up by a
02:31 factor of 10, you owe a ton of you you
02:35 basically owe all of that stock or that
02:36 Bitcoin back at a price that you can no
02:39 longer afford. So, as a result, there’s
02:42 something called a short squeeze. A
02:45 short squeeze, well, first of all,
02:47 there’s no such thing as a long squeeze.
02:49 You’ll never hear people talk about a
02:50 long squeeze, at least not for people
02:53 who are not using leverage. Um, so if
02:55 you just own an asset and the price goes
02:57 up or the price goes down, so what? You
02:58 can just wait it out. But if you are
03:00 short an asset, what that means is you
03:03 have borrowed the asset hoping the price
03:05 will go down and you can return the
03:07 asset at a cheaper price. So, you know,
03:10 if I’m short Bitcoin, which I would
03:12 never be because it’d be the dumbest
03:13 thing in the world, but if I am short
03:15 Bitcoin, I could short Bitcoin at
03:17 $125,000 per coin, which means I borrow
03:20 Bitcoin at $125,000 per coin. I hope
03:23 that the price drops to 110. Then I buy
03:26 the Bitcoin back at 110, return the
03:28 borrowed Bitcoin, and I made up I make
03:30 the money between there between the 110
03:32 and the 125. So the problem in a short
03:35 squeeze is if the price goes up, your
03:38 your downside becomes unlimited because
03:40 as the price rises, uh, it squeezes your
03:43 collateral and as your collateral gets
03:46 squeezed, you are forced to buy the
03:48 Bitcoin to cover your position.
03:50 otherwise you get liquidated and lose
03:52 all of your money. Um, so the same thing
03:54 happens. I’m not sure if it’s in futures
03:56 or options because I don’t understand
03:58 that world well enough, but a gamma
03:60 squeeze is when too many people have bet
04:03 that the price will not end above a
04:05 certain level. So right now for the end
04:08 of October, there’s a huge amount of I
04:10 guess puts and calls. I don’t know. I
04:12 don’t get into futures and options and
04:14 all that, but the magic number is
04:16 123,000. 1 2 3. It’s easy to remember. 1
04:19 2 3. So there is a huge number of people
04:22 hoping that the price ends above uh
04:26 123,000 at the end of October and a
04:29 different set of a huge number of people
04:30 hoping that the price ends below 123,000
04:34 because if the price ends below 123,000
04:37 then all of the people who bet on the
04:40 price not exceeding it, they get to
04:43 collect their premiums on their options
04:45 or futures or whatever it is and it
04:48 doesn’t cost them anything. But if the
04:49 price starts to go above 123,000, you
04:52 get what’s called a gamma squeeze. A
04:54 gamma squeeze means a bunch of people
04:57 committed that in exchange for making
05:00 some money now that they would cover the
05:02 upside above 123,000. Now, they did that
05:06 because they did not think Bitcoin would
05:07 end October above 123,000. So, they
05:10 said, “Sure, I’ll give give you 10% on
05:13 your money and I’ll give you the upside
05:15 above 123,000. If it ends below 123,000,
05:19 I get to keep that 10%. But if it ends
05:21 above, I’m on the hook for an unlimited
05:23 amount of money. So the problem is if
05:26 the price goes above 123,000 and stays
05:29 there and starts climbing. Now you have
05:31 a huge number of people that essentially
05:34 the tide went out and they found out
05:36 that we all found out that everybody
05:38 swimming naked, right? That’s the famous
05:39 saying about investing is when the tide
05:41 goes out, you find out who’s been
05:43 swimming naked. Well, a lot of these
05:46 people uh that have essentially again my
05:50 brain does not want to go figure out
05:51 right now if they sold puts or calls or
05:53 you know options expiry and expiry and
05:56 all this sort of stuff. But anyway, all
05:58 the people that bet that the price of
05:59 Bitcoin would not be above 123,000 are
06:03 are on the hook for an unlimited amount
06:05 of losses if the price is above 123,000.
06:09 and therefore they have a significant
06:10 incentive if they can uh by selling
06:14 Bitcoin that they own to try to keep it
06:16 below 123,000. But if the price starts
06:18 to go higher, you get a gamma squeeze.
06:20 And a gamma squeeze is a bunch of people
06:23 that need to own a bunch of Bitcoin
06:26 because they are stuck covering the
06:29 entire upside above 123,000. So let’s
06:32 say the price goes from 125 to 130. All
06:37 of these people are now seriously losing
06:39 money. Then the price goes to 135 and
06:42 they are now seriously seriously
06:44 seriously losing money. And what happens
06:46 in a gamma squeeze is all of those
06:48 people end up having to go buy Bitcoin
06:50 to cover themselves. Essentially, it’s
06:53 like the tide went out and everybody is
06:55 scrambling to buy clothes because they
06:56 were hoping nobody was going to find out
06:58 they were swimming naked. But now that
06:60 the tide is going out, uh, clothing is
07:03 selling at a premium and everybody who
07:05 was swimming naked now really, really
07:06 really, really wants to buy some
07:08 clothes. So a gamma squeeze is
07:10 essentially in in this case at the end
07:12 of October because so many people have
07:14 bet that the price will or won’t go
07:16 above 123,000. If the price goes up, it
07:20 starts squeezing all of those people
07:21 that were swimming naked because they
07:23 are on the hook for unlimited losses
07:25 above 123,000. Which means at some point
07:28 you can get a bunch of panic buying by
07:30 all the people who were swimming naked
07:33 trying to own enough Bitcoin up there to
07:35 cover their losses. Because as soon as
07:37 they buy the Bitcoin, they’re not
07:39 subject to the losses anymore. For
07:41 example, at 120, you know, 123,000,
07:45 let’s say that they can only stomach the
07:47 losses up to 130,000 because they were
07:49 betting the price was going to be down,
07:51 but instead it’s up. Again, you don’t
07:53 need to worry about this because nobody
07:54 who’s watching this video is doing
07:56 options or futures or puts and calls and
07:59 all that, but it’s worth knowing about
08:01 because it might result in the price
08:02 going up very quickly. Um, okay. So, the
08:06 price goes from 123 up to 130. Let’s say
08:09 at 130, a bunch of them decide, I can’t
08:11 take the pain anymore. I’ve got to buy
08:13 Bitcoin at 130 because I can’t stomach
08:16 the losses above 130. So, a bunch of
08:18 them buy Bitcoin, which pushes the price
08:19 even higher to 135. Well, at 135,
08:23 there’s a bunch more people who are
08:24 like, “Whoa, whoa, whoa. I can’t stomach
08:26 the losses above 135.” So, they go have
08:30 to cover their position by buying a
08:31 bunch of Bitcoin, which pushes the price
08:33 to 140, resulting in a bunch of people
08:35 that were positive it was never going to
08:37 get to 140 now panicking because now
08:40 they’re going to be deep underwater
08:42 above 140,000 because they need to cover
08:45 themselves and buy close cuz the tide is
08:47 going out much farther than they
08:49 expected. And that pushes the price with
08:52 all of those people buying to 145 and it
08:54 just keeps happening. So if we get a
08:57 very rapid price rise up to 150, first
08:60 of all, it might not stay there. I mean,
09:01 we might go to 150 and then drop back
09:03 down into the 130s or something like
09:05 that. Nobody knows. Uh but uh the reason
09:09 I tell you all of this is because in my
09:12 opinion, you should buy as much Bitcoin
09:13 as you can and hold on to it for as long
09:16 as conceivably possible right now. Now,
09:18 why should you do that right now?
09:20 Because as soon as you end up with a
09:21 gamma squeeze, if once happens, the
09:23 price starts to rise very quickly. As
09:25 soon as the price starts to rise very
09:27 quickly, it becomes pretty dicey when
09:29 you’re out there buying Bitcoin because
09:31 again, you’re all going to be
09:34 so the price rockets up and you’re going
09:36 to be asking, “Hey, should I buy Bitcoin
09:37 right now or not?” And I’m going to say,
09:39 “Well, dang it. We’re in the middle of a
09:40 gamma squeeze. Uh things are pretty
09:42 crazy. It would have been nice if you
09:44 bought the Bitcoin before this because
09:46 right now you’re basically trying to buy
09:47 Bitcoin in the middle of a storm.” So,
09:50 that doesn’t mean it’s a bad time to buy
09:51 Bitcoin. It just means it’s uh, you
09:53 know, the price is going to be going
09:54 kind of crazy for a period of time. So,
09:56 the reason I tell you all of this is
09:58 because if a gamma squeeze happens and a
10:01 bunch of you are like, “Hey, Joel, why
10:02 didn’t you tell me Bitcoin was about to
10:04 rocket up toward 150, I’m going to say I
10:07 did. I did. I recorded an entire video
10:10 explaining what a gamma squeeze was.”
10:12 And I only bring this up because James
10:14 Czech, my favorite Bitcoin analyst who
10:16 does the Czech on chain newsletter, says
10:18 there is a possibility this is going to
10:20 happen, which is the only reason I’m
10:21 aware of it. And he tends to be right.
10:24 Even though he did not provide a
10:26 probability this would happen, he tends
10:28 to be right. Um, so he brought it up and
10:30 said, “Hey, you know, we may need to be
10:33 sort of aware that a gamma squeeze could
10:35 be happening. And if he’s going to bring
10:36 it up, I feel like part of my job is to
10:38 translate his more technical view of the
10:41 world with a more downto-earth view. And
10:43 again, if we do get a rapid rise to 150
10:46 and people are complaining that I should
10:48 have told them it was coming, I’m going
10:50 to send them this video and say, “I did.
10:52 I did tell you it was coming and you
10:54 should have bought the Bitcoin and now
10:56 you got to buy it at a lot higher
10:57 price.” Which is unfortunate. But um
10:60 anyway, I didn’t want to not record a
11:02 video about it. And then the price
11:03 rockets to 150 and everybody’s like,
11:05 “Wait, I should have known. I should
11:06 have known. I should have known. I would
11:08 much rather record a video and say,
11:10 “Look, I don’t know what the probability
11:12 that we get a super rapid rise to
11:14 $150,000 is.” I don’t know. Is it 20%?
11:17 Is it 50%. I don’t know. Nobody knows.
11:20 But if it does happen, I want to give
11:22 give you as much knowledge and
11:24 information as I possibly can so you can
11:27 make an informed decision. And my advice
11:29 stays the same. Buy as much Bitcoin as
11:30 you can. Hold on to it for as long as
11:32 conceivably possible. It really is that
11:34 simple.