Why Bitcoin s Selloff Is JUST THE BEGINNING

The price of Bitcoin is falling off a cliff. The cryptocurrency has lost a whopping 29% of its value this week alone, that's a lot. And we're about to discuss why in just a moment, but first, Cenk, you went to Wharton Business School, do you know about the funds and games, what's going on here? You know about all the funds and games. Okay, so look, there's a big sell off, that's obvious. The question is why, and there's a very interesting theory that goes to the elites, maybe manipulating things. No. No, they would never do that. That would never happen. But there's also a second part, hence the two cents, about what is happening for the entire economy, and how this might be a symbol of it, so I need you to buckle up and brace for impact. So before we get to the reasons why this sell off is happening, I really do want to focus a little bit longer on how big the Bitcoin sell off really is. So here's a handy chart that you can take a look at, and you can see, wow, the price of crypto really did fall off quite a bit recently, okay? So you're looking at the price of Bitcoin over the past year, and as you can see, about a year ago, the price of Bitcoin was just under $100,000. In October of last year, the price of Bitcoin reached an all-time high of over $126,000. But since then, Bitcoin has erased all of the gains that it made last year. In fact, the price has plunged even further to approximately $67,000. So the price of Bitcoin has now reached a 15-month low, and people are wondering, is there any end in sight? So Michael Burry, the investor who was portrayed by Christian Bale in The Big Short, says no. Here's what he says. Sickening scenarios have now come within reach. Burry argued that Bitcoin has been exposed as a purely speculative asset, failing to take off as a debasement hedge similar to precious metals, because precious metals are actually worth something. Bitcoin is only worth the hype. You guys get it? No one has been able to convince me or explain to me otherwise. Yeah, so what Michael Burry is saying is important because if Bitcoin operated the way that its enthusiasts were hoping, when the dollar is struggling, it could become a hedge. Hey, we can't rely on the US government or other governments, but we have this Bitcoin that's based in this system that's more sound. And so like gold, when the dollar is weakened or the economies are weakened, they should go up, but it's not going up, it's going down. So then Burry is saying, well, economic laws and rules dictate that that means it is not something that has inherent value, it is just merely speculative. Exactly, further losses, he said, could rapidly strain the balance sheets of major holders for selling across the crypto ecosystem and trigger widespread value destruction. However, you should keep in mind that cryptocurrencies are notoriously volatile, right? So there have been other instances where there have been sell-offs and then the value of crypto goes back up or these coins go back up. But I also want to just note the fundamental argument that Burry is making here still remains true, Bitcoin in and of itself is worth nothing. It's only worth the hype. And that's why you'll hear the crypto adherence and the fans of crypto constantly talking it up, but it's not actually worth anything on its own. So, and by the way, Bitcoin is really no exception. So three previous cycles have seen Bitcoin crash roughly 80% from its highs only to rebound and drive even higher. So that goes to the point of volatility, sorry. So let's go to Bloomberg, because Bloomberg says that Bitcoin's crash is unlikely to affect the stock market overall. But we still need to discuss why this is happening right now, what's causing this sell-off. And to do that, we need to talk about precious metals. So the prices of gold and silver had increased dramatically in recent months. That being said, those prices fluctuated wildly in recent days. So even those assets, the value has gone down, people have been selling their gold and silver. But overall, the precious metals trade is considered to be a hedge against the weakening dollar. Known on Wall Street as the debasement trade, the strategy is driven by fear that government's inability to tame inflation or slash debt will erode the system of currencies that underpin the global financial system. And Bitcoin has been marketed as a similar type of hedge, but it's failing to live up to that promise. As explained by CNBC, digital assets, including Bitcoin, have fallen deeper into the red as investors reassess the practical utility of a token that has been championed not only as a hedge against inflation and macro economic uncertainties, but also as an alternative to fiat currencies and traditional safe havens, such as gold. Investors could also be pretty wary about the stock market overall, which has been boosted extraordinarily with these high valuations for years. I just think that quantitative easing has led to massive asset bubbles, including in the stock market, and I'm worried about that. Because honestly, anyone who has invested in the stock market in the form of an IRA or 401k, even pensions, knowing that these asset bubbles exist, knowing that the stock market is kind of a house of cards given corporate stock buybacks, quantitative easing, cheap money, that stuff makes me worried. But nonetheless, one popular measure, a cyclically adjusted version of the price to earnings ratios that rely on analyst forecasts of future profits, says that stocks have been more expensive only once during the past 100 years, and that was right before the dot-com bubble bust or burst in 2000. Yeah, so there's two different things here. One is Bitcoin, and the other is the markets overall. Right, in the state of the economy. So first off, on gold, yeah, it said it had a little bit of a dip recently, but I don't think that that's indicative. I think that it's gone up 70% in the last year, which is huge. And the reason why it's going up is clear, which is that everybody's worried about the dollar and the markets overall. So that's indisputable, right? When you get to Bitcoin, you've got different, when you get to crypto, I should say, you've got different degrees of trust that people have, right? So meme going coins are just absolute trash, and everybody knows they're trash, and they're nothing but speculation, right? So the rest of it is different degrees, but people thought Bitcoin is the most stable. That's the real currency. That's not just like an NFT or a flash in the pan, or a rug pull, etc. But now you're seeing, well, maybe it's not a rug pull, and it's not, I think, although we're- No, I think it's a rug pull. Well, we've got a- I've never trusted crypto, not once. Yeah. I've always thought that it was a scam. By the way, Trump thought it was a scam until he realized, well, why can't I be in on the scam? For sure. You know? Yeah, and then he loved the scam. So but now you're seeing Bitcoin crash in a similar way. And you get the sense, yeah, the whole thing's speculation. But now when you turn to the stock market, and it's overvalued at a historic rate, well, in a sense, it's not a scam, but it's problematic. It's massively problematic, right? It's a bubble, right? Like it's artificially inflated. Yeah. So look, there's two theories as to why people do believe in the manipulation. And when you read the Epstein files, Epstein talks about, hey, let's root for a crash. Because if we get the crash, then we'll all be able to buy low. And those are some of the richest and most powerful people on Earth. Yes, yeah. Okay, but I think the larger phenomenon in this case is, I think Wall Street is high on their own supply. So they just keep buying and buying and buying. And I know it's about the crash spectacularly when I start hearing. No, Cenk, this is a different type of market. Right. This is the type of market that doesn't go down. Yeah, yeah, yeah, yeah, yeah. I heard that right before 2008. I heard that right before 2000. So we're in a lot of trouble here. And so the reality is, guys, why is it overinflated? They're like, AI is going to create trillions of dollars in wealth going forward. These tech companies, trillions of extra wealth that's going to be created. And we're all going to have robots and none of us are going to work. And they've got all these fantasies in their heads. But who's going to buy all that stuff when AI leads to 10 to 20% unemployment? So, I mean, we're not even talking about that. That spectacular crash is definitely headed in our direction. But right now, we're worried about the bubble before the crash, right? So, it's just a tinderbox at this point, and I'm worried that people are going to panic any second now. And pull everything out of not just Bitcoin, but the stock market. And then the collapse begins. Every time you ring the bell below, an angel gets a swings. Totally not true. But it does keep you updated on our live shows.