Explained: What are Robert Breedlove’s thoughts on Bitcoin’s price volatility?

On today’s show, Robert Breedlove talks about his thoughts on Bitcoin’s price volatility. This is a great discussion for anyone skeptical of Bitcoin to listen to.


Preston Pysh (01:26:15):So let’s say somebody shared this discussion with a family member, and the family member is saying, “All right, this sounds interesting. Right? I’m going to buy some.” But here’s where I’m worried is it’s just so volatile. So, what are your thoughts on the volatility? Because it is. I’ve traded a lot of different things through the years, and I can honestly tell you the volatility on this thing is wild compared to what I think a lot of people are traditionally used to in financial markets. So, I’m kind of curious to hear some of your thoughts on volatility and how a person should think about that, how they should manage their risk associated with that. Talk to us.

Robert Breedlove (01:26:53):I would say first, to set the context, is that Bitcoin is, right now, the ultimate risk-on asset. It’s got the highest volatility, highest performing asset in history, but it’s the ultimate risk-on asset because it’s competing to be the ultimate risk-off asset. Talking about something harder than gold. Gold is, historically, the number one safe haven of value, the least, or the most trust-minimized money in the world. So, Bitcoin’s either zero, it’s either nothing, or it’s a global reserve asset. So it’s somewhere between zero and 100 plus trillion dollars in value. And the outcome, I think the more you study it, it’s pretty binary. It either does what it’s going to do, all of these network effects and incentives we’ve elaborated on today. They either work or they don’t. There’s some black swan that just takes Bitcoin out completely.

Robert Breedlove (01:27:56):So, to go from zero to 100 plus trillion dollars is a nonlinear path. You’re never going to just have this straight asset growth. And a core characteristic of markets is that volatility tends to be inverse to market cap. Amazon’s a great example of this. I think in 2000, 2001, drawdown, Amazon was down 94%. It has grown double digits since every year. It’s had double-digit drawdowns in most of those years, and its total return since that 94% drawdown’s 40,000%. And Amazon too, it accomplished this historic feat by basically dominating a scarce space, which were digital distribution networks, which is, essentially what Bitcoin’s doing. Bitcoin’s dominating digital monetary networks. It’s a necessarily scarce space, but I think it’s a pretty apt example. And so, you have to just understand that. You’re getting into an asset that’s 12 years old. It has a $200 billion market cap competing to have 100,000 billion plus market cap.


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