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I hear you're also becoming positive about Bitcoin. Is that true? Yes, many people have been fooled by the hype surrounding Bitcoin. Unfortunately , many people are going to lose a lot of money in Bitcoin . It is true that those who bought it many years ago and are selling it now have made a lot of money .
But, like Social Security, it's also a Ponzi scheme . Those who started taking Social Security in the 1940s and 50s benefited greatly. But, what about those who hope to get it now ? Unlike Baby Boomers , Generation X, Y, Z, and Millennials are all just paying taxes. They will never receive much money from Social Security .
That's why, those who buy Bitcoin now are paying for the profits of those who bought it years ago , because you are buying the same Bitcoin that they are selling. But, Bitcoin is not digital gold. First, look at what happened last night . People panicked as the missiles fell. The S&P fell one and a half percent on news that Israel had retaliated for the attack on Iran .
So, S &P futures immediately fell one and a half percent. Gold immediately rose by one and a half percent, reaching a record high of $2,415 . And what happened to Bitcoin? It fell by 6 percent . That fell more than the stock market . That is, it is not a safe asset, nor is it a hedge . This is much riskier than what people are looking for protection from .
So, how can digital gold be a safe haven asset when it is not ? Moreover, it is not a store of value, so it is not a hedge against inflation. Because there is no real value worth hiding in Bitcoin. There is a price for this, isn't there? Bitcoin has a market price, but there is no intrinsic value that justifies that price .
Only demand and supply are holding it up . But gold is a real metal. It is a precious metal, a physical object, and the most useful metal on the periodic table. When you store gold , you are essentially securing all future needs for that metal . In the future, people may use your gold for various purposes .
So there will be demand for it . When the prices of wheat, oil, and pork rise due to inflation , the price of gold will also rise, right? When there is inflation, the prices of all these goods increase. But Bitcoin is not actually a commodity, and although the CFTC says it is a commodity rather than a security , it has no real use like other commodities .
All you can do with Bitcoin is send it to someone else. That is its only use. You know, it's very simple. I agree with that. It's very simple. But the reason sending Bitcoin is so easy is because you don't have to send anything. It's much easier to send nothing than to send something. So as long as you're willing to accept something that's nothing , that's okay.
Bitcoin is amazing. But the problem is, in the end people don't want something that is nothing. They want something. But as long as there is a fool willing to buy Bitcoin, it will have a price and people can pretend it is a digital version of gold. But that's not the case. Just as digital food is not food , digital gold is not gold.
Yes? I can't eat digital food. Yes, I can make a picture on the computer that looks like a ham sandwich. But I can't eat a single piece of it. That doesn't satisfy my hunger. In fact, if you try to live on digital food alone, you'll starve to death, right? So, you can't substitute anything . I was in a discussion about Bitcoin the other day, and someone commented , "Look, I do n't understand.
Bitcoin is the digital version of gold, gold is analog, and Bitcoin is digital." Photography is one of the examples he mentioned. He said, " We had film in the past , now we have digital photography, so this is the same." That's not the same. Because if I have a digital photo, it's like I have a picture .
Yes? So if you want to take a photo of your child, you can use a digital camera . You still get a picture. You do n't need a film, do you? You don't need old Kodak film or Polaroid. Even if I take a digital photo, I still get a photo, you know that . That is not the same as this. What if I took digital gold, which is Bitcoin , and said, "Okay, I'll use Bitcoin instead of digital gold ." No, I can't get any metal.
I can't make anything with it . Look, the bracelet I'm wearing here , it's a 24- karat gold bracelet. But, I bought this on mene.com. mene.com, that's a very good jewelry store. I really like their stuff. But, you can't make this bracelet with Bitcoin . In fact, you can't make Bitcoin without gold, because computer chips contain gold to conduct electricity .
So, I can't put Bitcoin on a computer chip to transmit electricity . There is no electricity transmission there. Yes? So, you can't replace gold with Bitcoin like you can replace a vintage camera with a digital camera. Or, you know, I have my music digitally . I do n't need to have a record. I can have digital music because I can still hear the sounds.
I can still dance to that beat, right? So, it works. But, digital gold does nothing like real gold does. Digital food doesn't do anything that real food does. So, some things can work digitally, while others can't. Gold cannot be replicated digitally, so Bitcoin is not digital gold. That is deceitful gold.
Even though ETFs are now buying tons of Bitcoin , do you still believe that the value of Bitcoin will drop to zero , because it really has no value ? BlackRock is buying Bitcoin, and many others are buying it. It's still useless. Yes, first of all , BlackRock and none of those big Wall Street firms are buying Bitcoin.
Their users are buying Bitcoin. They are just registering bets . They established these ETFs , and let their customers buy them if they wanted to . If Wall Street gets them a commission, you'll let them do anything stupid. That's true. Right ? That is, that is what is happening there . They are just participating in it .
I don't think many of these big companies are buying for their own accounts , are they? These are just user accounts . But, all the buying that took Bitcoin to 73, 74 thousand, that is, to that peak, came from here. All this excitement about ETFs, followed by the initial buying spree through ETFs. But, I think it's over .
I think the next big move will be a sell-off from ETFs , because many people rushed in expecting skyrocketing profits, meaning a hundred thousand, two hundred thousand or a million dollars, thinking it was a safe investment. I think if the price of Bitcoin drops below 60,000, maybe even 50,000, a lot of people who got in will try to get out .
I don't think they are long-term hodlers . These are not true devotees who believe foolishly. They saw a trend and jumped on it. They thought they could make money quickly. Some of them sold their gold ETFs or gold shares and invested in Bitcoin. When it doesn't go as planned , when it doesn't go the way they hoped, I do n't think they'll hold on to it for the rest of their lives.
I think they will either cut their losses or take a small profit and then move on, depending on when they bought . The problem is that they may not be able to sell . The market collapses because there are no buyers . Because when people sell their ETFs , those ETFs have to take the Bitcoin and sell it on the market, which means there have to be buyers who pay real dollars to buy those Bitcoins .
You cannot pay with Tether. I do n't think there will be enough liquidity to support redemptions. There is liquidity to support purchases, as there are many people who want to sell their Bitcoin to ETFs . But the whales ( large investors ) who sold their coins are not interested in buying them back .
That is, certainly not at these prices. Again, maybe they can try again at much lower prices . But yeah, I do n't think Bitcoin will drop to zero anytime soon. But it can go very close to zero. But I think that, if not always, at least in the future people will be willing to trade Bitcoin . This means that if you could buy Bitcoin for just one dollar again, someone would definitely buy it.
So, I don't know if it will go completely to zero. But I think they will continue to be traded . Even bankrupt companies can be traded, right? They trade at the value of the coins , but they do not fall to zero even if they are worthless. There will still be people who trade shares. Therefore, people may continue to trade Bitcoin for some time .
So, it may take a long time for it to drop to zero . But it seems to have reached zero. That is, if you lose 99% of your money , even if Bitcoin drops to 100 or 1,000 , meaning if you buy at 60, 70 thousand and it drops to 1,000 , it still feels like it has reached zero, even though it has not reached zero.
Okay, let's see what happens with Bitcoin, because many people expect Bitcoin to be a digital currency , and I know you've been very clear and strong about your views on this . So, I always appreciate that . If you like this clip and want to watch the full conversation, click on the button there. And those who want to stay updated on financial and business news can join my free financial newsletter ' Market Briefs' by clicking on the button below. Thanks for watching, see you in the next video.
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