It’s Over: Bitcoin Just Broke The US Dollar

You know, Warren Buffett said Bitcoin's a rat poison. And you know what? He's right. And guess what? Warren is the rat. Now, if somebody calls that a store of value, I mean, I think they're delusionary. I think it went up another $7,000 in the last couple of hours. Well, I think it's going a lot higher. We're getting ready for another big dump. It's all about pump and then dump. What's up, you guys? It's Graham here. So apparently, Bitcoin is breaking the U.S. dollar. Normally, I tend to hold back on my personal opinion for the sake of relaying the data, but I have to admit it is looking more and more likely that Bitcoin has the potential to one day become the global reserve currency, overtaking everything in its path. After all, Bitcoin has become the best performing asset of 2024 and of the last decade, averaging an annualized return of 102%. If you just bought Bitcoin a year ago, you would have already doubled your money. And with public companies now quietly adding more Bitcoin than ever to their balance sheets, all of this means that the biggest gains and the biggest risks are right ahead of us, if you know where to look. That's why it's more important than ever that we discuss the bull and the bear cases for today's value, the dangers that everyone needs to take into consideration, and then finally what the experts are saying it could be worth in the very near future. Because if this comes true, it's absolutely mind-blowing. Although really quick, if you appreciate the last minute breaking news videos like this, it would mean the world to me if you hit the like button or subscribe if you haven't done that already. I know it's silly to ask for it, but it helps out the channel tremendously. And as a thank you for doing that, here's a picture of a baby hedgehog. So thanks so much. And also a big thank you to Gemini for sponsoring this video. But more on that later. All right. So in terms of Bitcoin's price, let's just get this out of the way. We have money problems. Like sure, we've seen a 10% annualized return of the S&P 500 since the 1920s, but we've also printed an average of 10% more money each and every year during that exact same time frame. So this is what many people believe Bitcoin eventually solves. In fact, Bitcoin has become one of the asset classes to have outperformed the money supply by a wide margin with even more upside expected. How? Well, after making its debut in 2009 after the great financial crisis, Bitcoin slowly adopted mainstream and corporate popularity, rising more than 25,000% since 2015. To put into perspective just how significant that is, this return is 100 times higher than that of the S&P 500. Basically the premise is that there's only ever going to be 21 million Bitcoins in existence. And that's it. Of which there's roughly about 1.1 million Bitcoin left to be mined, which means 95% of its supply has already been accounted for. And as demand picks up, the price skyrockets. Although even though Bitcoin has gone up over 20 million percent since its inception, it's also not uncommon for it to drop 50 to 90% before consolidating and moving back even higher. So what does this mean for the average person? And how could you use this information to make money? Well, in order to talk about how high or how low the price could go, we first need to talk about supply and demand. Look, here's the part that I found most surprising. As of right now, 62% of adults say that they own stocks. 65% say that they own a home. But just 14% say that they own Bitcoin. So who's the biggest buyer? Lately, it's a mix of institutions and ETFs that are buying up as much as they possibly can. For example, MicroStrategy currently owns 3% of all circulating supply. Tesla added it to their reserve in 2021. BlackRock's ETF is one of the fastest growing funds of all time. Pension funds are beginning to buy in. And even the United States has a stockpile worth tens of billions of dollars. On top of that, several other countries currently hold a significant amount of Bitcoin on their balance sheet. And with ongoing talks about a Bitcoin reserve, entire nations are now considering adding Bitcoin to their balance sheets as a way to boost their economy and even back their own currency. As proof of this, 263 entities currently have Bitcoin on their balance sheets as a replacement for holding onto the US dollar. And nine countries actively hold it, including China, who quickly seems to be catching up to the United States. All of this is becoming so significant that 65% of investors say that they plan to buy or invest in digital assets in the future. Again, a huge increase from the 16% that currently owns it. This has become so impossible to ignore that even half of all financial advisors plan to recommend cryptocurrency investments to their clients within the next 12 months. Essentially, as of today, retail investors are bringing in liquidity and excitement into the bull run, and institutional investors are providing a lot of capital to keep it relatively stable. Just compare it to other asset classes over the last 10 years. Since 2015, inflation has averaged 2.65%. The dollar has lost 26% of its value. Home prices are up roughly 100%. Gold has risen 181%. The S&P 500 has risen 200%. And Bitcoin is up 35,000% during that same time frame. Like, even if we look back over the last five years, it's currently up over 1100%, outperforming every other asset class in the entire world. So much so that if you just invested $1,000 10 years ago, you would have almost $400,000 today. Or I guess like this person says on Twitter, I bought my home in April 2023. The price was $500,000, which was 22.5 Bitcoin. Today, the value is $575,000, which is 5.3 Bitcoin. In a little less than two years, my home value increased 15% in dollars, but it lost 76% of its value in Bitcoin. Real estate is collapsing in front of us. This is why several financial advisors have started recommending their clients allocate about 2% of their portfolio to cryptocurrency, with nearly one in 10 saying that the perfect allocation is actually between 10 and 14%. However, even though some analysts eventually expect the price to reach a million, five million, or even $10 million in the future, there are some massive risks that you need to be made aware of. Because if you don't follow a few of these crucial steps, you could risk or lose quite a lot of money. Although in terms of adding Bitcoin to your portfolio, here's what I think is the most surprising. Fidelity recently found that a small allocation to Bitcoin actually helps boost the overall return in a traditional portfolio without increasing risk, and even BlackRock agreed that a small allocation could be suitable for most investors as a replacement for bonds. This is why I've taken the approach of diversifying my portfolio as much as possible, and using our sponsor, the Gemini credit card, could help you do exactly that. For those unaware, they're the only instant crypto reward credit card that gives you Bitcoin back every time you purchase. For example, you could get up to 4% back on transportation, 3% back on dining, 2% on groceries, and 1% back on everything else, which is fantastic for a card with no annual fees. Honestly, it's just a fun way to earn rewards in a way that's not constantly going unused or getting devalued. And in this case, Bitcoin rewards earned and held for one year on the Gemini credit card have actually appreciated 176% on average. 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All right, now before we dive into the math between how Bitcoin could one day be worth $10 million, we need to talk about the risks. To break this down, let's start with one of the most respected investors of all time, Warren Buffett. He's famously said that you can't value Bitcoin because it's not a value producing asset. If you buy something like Bitcoin or some cryptocurrency, you don't really have anything that's produced anything. You're just hoping the next guy pays more. To clarify this even further, he then goes on to explain that assets to have value have to deliver something to somebody, and there's only one currency that's accepted. You could come up with all kinds of things. We could put up Berkshire coins. But in the end, this is money, and there's no reason in the world why the United States government is going to let Berkshire money replace theirs. So even though this seems like a fairly rational explanation on the surface, it is worth pointing out that more recently, the White House has actually begun embracing Bitcoin as a meaningful innovation, despite Charlie Munger being completely against it. In the past, he's gone so far as to call Bitcoin rat poison that will go to zero, that it's crazy stupid gambling. Anyone who disagrees is an idiot, and he compares it to, and I quote, somebody else is trading turds and you decide I can't be left out. This is partly why one Nobel economist believes that Bitcoin has close to 100% probability of becoming worthless within the next decade. Jamie Dimon of JP Morgan also agrees with this sentiment, slamming it as worthless and a tool for criminals, then proceeding to draw comparisons to smoking, where you have a right to use and own it, but it's bad for you, even though now he's allowing his clients to buy it. It's also easy for critics to point out that just 1.86% of wallets control the vast majority of its supply, even though many of those wallets purely hold Bitcoin on behalf of their clients. But you know what? I digress. Despite plenty of rational Bitcoin skepticism, plenty of past Bitcoin critics have completely reversed their stance today. Like take a look at the billionaire Ray Dalio. He previously has called it a bubble, but now refers to it as one hell of an invention. Or how about Larry Fink from BlackRock? Years ago he said that it's an index of money laundering, but now he admits it's a legitimate financial instrument. That's why we've recently had several analysts come in with some pretty shocking price predictions over the next few years and decades. And if you're curious what I think of this, as well as my own strategy for investing in Bitcoin, here's what you came for. To start, let's talk Bitcoin price. Over the next one to three years, it seems like the general price target falls between $100,000 and $200,000 given increased demand, institutional buying, and less regulation. By 2030, you have investors like Robert Kiyosaki who think that it could hit $300,000 as a bear case or as high as $1.5 million in a bull case. Cathie Wood believes it might rise as high as $2.4 million. And you also have various platforms showing what they think their users believe is a more realistic price, which falls in the range of $600,000 to $800,000 during this time frame. So take that for what it's worth. Then by 2035, or roughly 10 years from now, some analysts believe that Bitcoin could reach as high as $1 million, or $1.5 million as investors shift some demand away from gold, and Michael Saylor's models suggest $2.1 million could become reasonable. The highest prediction I could find on this in the next 10 years suggests that Bitcoin could reach a price of $10 million, saying that every past store of value has perpetually expanded its supply to meet demand. Bitcoin is the first that cannot. And finally, by 2050, if Bitcoin could be used to settle 10% of the globe's international trade and 5% of the world's domestic trade, a price of nearly $3 million wouldn't be out of the ordinary. However, just like other investors believe that Bitcoin's in a bubble and Americans will be harmed when it falls, there are some pretty severe short-term risks that you need to be made aware of. And in terms of what I'm doing, here's your answer. The way I see it is that so far, Bitcoin's not done well when the overall market's falling or where there's an economic slowdown. For example, just like stocks fell 25% during April's tariffs, Bitcoin fell 30%. It does seem to have a pretty similar correlation to the Nasdaq. And that means if the economy slows down, there's a good chance that Bitcoin could fall alongside everything else. And that needs to be considered. But on the flip side to that, the fact that there is risk and heavy skepticism leads me to believe that we still probably have a lot more room to grow, especially because if everyone were all in, I would then argue at that point, there's no more price discovery left. And we're probably in a mania with nowhere left to go but down. That's why I think if you want to lessen your chances of losing money, just keep this in mind. One, research has shown that the biggest enemy to your entire portfolio is overconfidence. In this case, a study in 2017 found that investors disproportionately attributed their success to ability rather than luck. And when that happens, they were more likely to make riskier investments that eventually lost them a lot of money. Now two, the hardest barrier to overcome is emotion. At first, you're hopeful that you can make a ton of money. You read stories about people who turn thousands into millions, and you think to yourself, oh, I could do that too. But that's where greed sets in. All of a sudden, you invest more than you're willing to lose, or you stay in an investment longer than you should because the price just keeps going higher. Although that is usually when you're hit with fear. It's the fear of missing out if you don't buy in even more, or the fear of losing money as soon as it falls in value. And that is where regret comes in. What if you invested now instead of later? What if you waited a little bit longer to see if you could buy it in cheaper? What if all of this regret starts leading to some pretty massive mistakes? And finally, three, beware fast, quick, easy profits. I've been actively watching and involved in Bitcoin since late 2016, and I have seen people make a ton of money and then subsequently lose all of it when it comes crashing down. The only people who I've ever seen successfully make money in cryptocurrency simply just buy Bitcoin, hold, and do absolutely nothing, even through the ups and the downs. They don't get emotional. They don't plan to sell. And for them, it really doesn't impact their life one way or another because they just invest an amount that they're willing to walk away from or lose entirely. This is why I've personally taken the approach of investing a small amount of my portfolio in a Bitcoin ETF I buy in consistently, regardless of where it trades. And even if it's worth more money one day, great. But even if it's worth less, it would suck, but it's not going to impact my lifestyle whatsoever. I'm basically invested in this with the mindset that one day it could be worth $10 million or it could also be worth a dollar. I have no idea, but I'm in it for the long haul. And either way, it's going to be okay for me. Oh, and lastly, if I could give you one last opinion of mine, it's just this. Don't buy the hype and don't sell the fear. Anytime I get a feeling of, oh, I got to do this now, otherwise I'm going to miss out. I usually end up making some pretty big mistakes. I make the best investments when it's just calm, collected a part of my routine investing portfolio. And that's it. I know all of this sounds pretty boring, especially with Bitcoin right now at the time I'm recording this $116,000 at 5% today. But trust me, anytime you make emotional decisions, whether you're buying or selling, usually that's when mistakes happen. So make sure to stay the course, set a plan that you're comfortable with. And no matter what, hit the like button and subscribe if you haven't done that already. So thank you so much for watching. And as always, if you've made it to this point in the video, feel free to comment down below and I will do my best to read and reply to as many of you as I can. Thanks again. And until next time.