Is Bitcoin Actually Too Volatile?

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In this video, I discuss how Bitcoin's credibly enforced maximum supply leads directly to its price volatility. You cannot have true scarcity and a fixed supply schedule without introducing price volatility.

The price elasticity of supply of Bitcoin is basically zero, which means that unlike all other commodities, Bitcoin cannot increase its supply even when Bitcoin prices move sharply higher.

All new tech begins in a volatile way. Amazon, Microsoft, and Apple all had very volatile stocks for many years, including many large drawdowns. Volatility for these stocks has come down over time as their market caps have increased.

And yet for some reason, economists expect an entirely NEW MONEY to emerge on the world stage fully formed, smoothly, and without any volatility. This is an unfair double standard.

Bitcoin has been extremely volatile for 12 years and yet has somehow managed to go from $0 to $426 billion market cap. This suggests that future volatility should not hurt future continued adoption.

Bitcoin's market cap is still very small relative to traditional asset classes. This means that value moving into and out of Bitcoin can have an exaggerated effect on price. Again, as the market cap of Bitcoin increases relative to these traditional pools of capital, volatility will come down.

Bitcoin is also the most free market that we've ever seen:

Trades globally 24/7
Not limited to a single exchange
No circuit breakers
No lock limit down
No government bailouts

When looking at Bitcoin, some people see a high-risk volatile asset. I see a low-risk store of value.

Not investment advice! Consult a financial advisor.

Seeing With Bitcoin Eyes:
https://www.youtube.com/watch?v=8KTl1mq5svo&ab_channel=TraderUniversity

Historical chart of Amazon drawdowns:
https://www.grufity.com/historical-data-chart-graph/AMZN.DRAWDN/Historical-Amazon-Drawdowns-AMZN

Price elasticity of supply:
https://en.wikipedia.org/wiki/Price_elasticity_of_supply

Bitcoin price volatility has come down over time:
https://www.buybitcoinworldwide.com/volatility-index/

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I am not being paid or otherwise compensated by any company or cryptocurrency project that I mention in my videos.

My opinion is not for sale. Please do not contact me with any affiliate or advertising deals.

#bitcoin
#volatility

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