➡ Bitcoin’s high volatility, or its tendency to have large price changes, is often seen as a problem. However, this article argues that understanding and using this volatility can actually lead to wealth creation. It explains that while Bitcoin’s price can drop significantly, it also has the potential to rise dramatically, offering high returns. The key is to manage your emotions and understand that the large swings in price are part of the process of investing in a high-growth asset like Bitcoin.
➡ The text discusses the importance of understanding your investment and having a clear reason or ‘thesis’ for why you’re investing in it. It uses the example of Bitcoin, explaining that its value can fluctuate, but if you understand why you bought it and believe in its future potential, you shouldn’t panic when its value drops. The text also emphasizes the importance of patience in investing, suggesting that you should only invest money that you can afford to leave untouched for a significant period of time.
➡ Investing in Bitcoin can be risky due to its high volatility, but this can also lead to high returns. Missing the best trading days can significantly reduce your profits. Despite the risks, it’s advised to hold onto your Bitcoin and even add to your position during downturns, as the biggest returns often occur during highly volatile periods. Bitcoin’s volatility is not a flaw, but a feature of its design as a fixed supply asset undergoing a monetary transition.

People say Bitcoin is too volatile and looking at today’s price action, and that sounds pretty fair. Bitcoin’s down more than 30%. Fear is everywhere and calls for another crash to get in louder every day. But what if Bitcoin’s volatility isn’t the problem at all? What if misunderstanding the volatility is the real reason people keep losing money every single cycle? Well, I’m going to break this down in this volatility masterclass, show you how to use this to build wealth instead of losing it. So let’s go. All right. So we’re going to jump in today and talk about Bitcoin volatility.

And again, if you don’t like Bitcoin, that’s fine. Every asset goes up and down. Every asset has volatility. So apply it to your favorite asset. But I’m going to use Bitcoin because one of the biggest objections I hear to Bitcoin is it’s too volatile. So Bitcoin is highly volatile. So it’s a great asset to use in this, but this is going to give you the entire investing blueprint that you need. But the thing with volatility, first of all, just real quick, is that if you don’t learn how to use it properly, then it’s going to shake you out.

It shakes people out every single cycle. Some people would say that it’s actually used to consolidate power and strip you of your wealth, strip of your assets. But I don’t want you to lose your assets and your wealth. I want you to get more wealthy. And so we want to learn how to use volatility the right way. First of all, what is volatility? And is it really a flaw? So like, Oh, I’d like Bitcoin. I see that people made a lot of money with Bitcoin. I understand it’s the best performing asset in 15 years, 10 years, three years, five years, whatever, but it’s too volatile as if that’s a bad thing.

So is it, is it a flaw or is it a function? Well, volatility scales directly with the opportunity. So the bigger the opportunity, the more volatility there is low volatility assets offer stability, but generally provide minimal real growth. So volatility is the measurement of an asset going up. So cash is great. It’s pretty stable, but it’s not going to go up or down like this US dollars in a bank or in a money market account or stable coins. There’s no growth. It’s stable, but there’s no growth. Recent data from iShares confirms Bitcoin has a 54% annualized volatility.

What does that mean? 54% annualized volatility. It’s roughly 3.5 times that of gold and five times more volatile than equity. So it’s too volatile. Yeah. It’s five times more volatile than equities. Yeah. It’s 3.5 times more volatile than gold, but volatility is the measurement of the asset going up, but also its ability to go down. So Bitcoin is going up by about 50. Well, in this case, 54% per year. It sort of depends on when you measure it. Right now, the last three years are like 70%, but it goes up about 50% compounding per year.

So that means I have the potential to make 50% on the upside, but I also have to be willing to stomach 50% on the downside. So when they’re saying it’s too volatile, they’re saying, I don’t want an asset that goes up 50% because that’d be terrible, right? No. What they’re saying is I don’t want an asset that goes down more than that much, but the problem is, is that it’s direct with the opportunity. Okay. Now this distinct profile classifies Bitcoin, not as risky, but as high energy. So it’s a high energy asset.

I mean, it moves a lot. So we have right here, global equities, 10.5%, gold right here, 15%, and then Bitcoin, 54%. So I want the 54% on the upside, but I don’t know if I can stomach it on the downside, but don’t worry. I’m going to show you how we solve this because again, I don’t want you getting wiped out. I want you to benefit from volatility. What does volatility actually measure? You might’ve heard like a 30 vol asset or a 50 vol asset. Like what does that even mean in plain language? It’s simply how much an asset moves.

That’s the volatility. How much does it move over a period of time? Bigger moves don’t signal instability. They signal higher energy. And as Michael Saylor would say, they signal vitality. He says volatility is vitality. It’s how much energy the asset moves, the liveliness, the movement of it. Again, we don’t want to invest into a dead asset. We wouldn’t invest into something that would never go up because we want to invest into something that goes up. We need it to have the energy, the volatility. Bitcoin averages a 30% correction every three to six months.

That’s normal behavior. As a matter of fact, since the last cycle low around 2022 Bitcoin hit about $16,000 from $16,000 to $126,000. It’s now in its third pullback of 30%. It’s third one. 30% is just par for the course. That’s the par for the course to be able to make it right an asset from $20,000 to $120,000. I have to be able to stomach a few 30% drawdowns. And so we can see this 30% correction, up 30% correction, up 30% correction, and then up each one of these is at a higher level.

So if you knew this going into it, you’d go well, okay, I mean, I’m willing to just ride this dip to get to a higher level. That’s exactly what’s happening with Bitcoin volatility. Okay, now returns and volatility are the same. You can’t separate them. You can’t have the 50% upside without the drawdown back to the downside without the reset. Now, I know a lot of people like with the benefit of hindsight go, well, what if I just sold here and buy back in here? We’re going to get to that in a second.

But the real people, the real reason that people are drawn to Bitcoin is that it’s going up at 50% of the year. That’s what they want. They want that 50% of the year, but you don’t get the 50% compounding without the 50% volatility. You can’t separate the two. They’re together. So when people say Bitcoin is too volatile, what they’re really saying is, I want the returns, but I don’t want the volatility of the downside. I don’t want the lightliness. I don’t want the movement. But you can’t have both.

So again, you can just sit in cash. You can do that. But you can’t take one without the other. If Bitcoin stops swinging, it wouldn’t be high growth asset. The volatility isn’t a side effect. The volatility is the engine of the growth. In order to get the big returns, you have to be willing to take a ride those big swings. And so you can see right here, the Kegar, the compound annual growth rate of assets. So cash doesn’t return anything. There’s no compound annual growth rate to cash bonds a little bit higher.

So cash is about a zero to one vol asset. Bonds is about a one to four. So it’s only going to move by one to 4% up or down. So you’re not gonna really make any money and aren’t really going to lose any money. S&P 500, you’re about 10 to 15%. NASDAQ about 15 to 20. And then we have Bitcoin all the way up here 50. But it swings wildly. Why volatility feels like failure? Why do people get shaken out of fear? Humans experience volatility emotionally. So everyone’s so emotional into the market.

And I don’t say this callously as someone who’s been in Bitcoin since 2015. I’ve suffered some big drawdowns. And what I can tell you is that while they get easier, and I’ll tell you why they get easy, they get a little bit easier. They don’t get easy. And I’m susceptible. My emotions are susceptible, like anybody else. And it’s pulling back at 30%. And news headlines are saying that it’s over and it’s dead and quantum is going to come destroy it, or whatever, whatever the government’s captured it, the Wall Street’s captured it, they’re going to crush it.

Like, I’m susceptible to it’s our emotions that get the best of us. It’s not mathematics. It’s not data, it’s emotions. So we feel and this is the key piece, because we’re humans and we’re emotion, we feel the drops two times more than the gains. This is the key piece because humans are highly attuned to danger, we have to we have to stay alive. So you know, we have to we have to see the snake in the grass. So it’s like, you know, I’m on YouTube, by the way, leave me some nice comments, because I could read like 100 or 200 nice comments.

And all of a sudden, there’s like one mean one. And it’s like, Oh, because we’re so attuned to fear. And so that’s why we feel the drop way more the drop is way harder than the benefit of the game, the mismatch investors chase the high volatility returns, but unknowingly bring a low volatility expectation. So I want the 50% upside, but I don’t shoot if it goes more than 10%. I’m out. They’re coming in with the wrong expectations. And if you’ve been in a sort of like relationship, gasoline, you know, it’s all about sitting those right expectations.

This mismatch creates panic, interpreting normal market breathing as catastrophic failure, like Bitcoin must be broken, it’s dropped 30%. It has to be broken has to be because of quantum has because of Wall Street, something like that. And it looks like this, I call this, really, I call volatility, the mismatch between perception and reality. Okay. This is reality. But what happens is, oh, my gosh, we’re gonna get rich with Bitcoin, every nation states gonna buy it. Oh, my gosh, quantum is gonna break it. Nope, quantum stuck in here.

Look out and more nations are buying it. Oh, nope. Now China wants to ban it. And we go back and forth with our expectations with our emotions. Meanwhile, it just keeps on trucking. Once you know this, you start to realize that these are your opportunities. The real breaker here is that you have no thesis. I say it all the time, you can’t borrow someone else’s conviction. So before you buy any asset, I don’t care what the asset is. What is it? Why am I buying it? What am I expecting from it? Why do I think it will go up? Over what timeframe I have to develop my own thesis, and I have to have my own conviction on it.

And what happens is that what breaks people here is they don’t have the thesis. Volatility only inflicts pain when you don’t understand what you bought, or why you bought it. I bought Bitcoin. Why? Well, because I thought it was gonna go up 50%. Why? Why do I expect that? What do I expect from it? How do I think that’s going to work? Let me give you this real estate analogy. I use it all the time. If you’ve heard it before, I’m sorry in advance. Everyone gets real estate. So let’s just say, when I was a full time real estate professional, we do this, I’d go to the city council, and I’d listen to what their plans are.

Are they going to rezone things? Are they changing things? Where are they investing? And I find out that about, you know, 30, 45 minutes out of town, they’re going to build a football stadium. And shoot, and I mean, that’s, that’s like a, you know, open area of land. But if they build a football stadium, that land is going to be in high demand. So they said, you know, it’s gonna take about seven years to get that football stadium out there. So tomorrow morning, I get my car, I drive out there, I find a couple pieces of land and I buy them.

Why? What am I buying land? Why? Because I think it will be more valuable in the future. Why will it be more valuable? Because they’re going to build a football stadium there when in seven years, I have my thesis. Okay. Now, what happens if a year from now, lots go up for sale next to my lots and they’re cheaper? Do I panic? Oh my gosh, why are they cheaper? Do I sell? Do I buy more? I don’t know. The first thing I do is I check my thesis. Is the football stadium still in progress? Have they got the permits? Have they got the plans? Have they got the financing? Have they broken ground? If the thesis is still intact, the football stadium is still being built in seven years, then I hold maybe I buy the land.

Hey, shoot, I’ll buy some more at a discount. Why not? Or I hold. Now, if my thesis has changed or violated. So let’s say for example, I look and I’m like, Oh shoot, they just discovered nuclear waste there. They can’t build my thesis is now broken. It’s a breaker. Then what do I do? Well, then I sell as quick as I can. And maybe I take a loss. So when we have volatility, like we have right now, Bitcoin’s down 30%. Oh my gosh, what do I do? Well, I don’t know. Why did you buy it? What was your thesis? Is your thesis still intact? If your thesis is still intact, then you do nothing, then you zoom out.

Serious Capital, the smart money asked, didn’t the underlying story change? They don’t ask, did the price move? They don’t look at the price. They look at the underlying story. That’s how Warren Buffett would do it. Warren Buffett would say, I don’t buy stocks. Meaning I don’t look at the price. I buy companies. The companies happen to be trading publicly, but I didn’t buy the stock. I didn’t buy the price. So is Bitcoin still secures? It’s still a decentralized network. Yes. It’s still decentralized. It’s still secure. Why would it go higher? Well, because nations and central banks can keep printing money.

Because they keep printing money, they want to control the capital. Okay, so by printing money and controlling capital drive people to buy a decentralized asset like Bitcoin, right? So did governments decide to stop printing money and live by their means? Within their means? No. Did they decide to give us all our freedom back and take away capital controls? No. Well, then my thesis is still intact. You could ask yourself, and this kind of illustrates that market price, the thesis value. And just ask yourself, like, what are the odds, the probabilities that governments stop printing money and live within their means? What are the odds that governments decide to give you all your freedom back and no longer do capital controls? I mean, it’s like, you know, less than 1%.

But that’s the thesis. Okay. Now, if we apply that lens to Bitcoin, Bitcoin’s purpose hasn’t changed. Digital scarcity. Digital scarcity remains absolute, regardless of the price. Is there more than 21 million Bitcoin? No. Can they make one 21 million? No. Now, if they find a way to do it, maybe my thesis changed. As of right now, it’s not. Since 2014, it’s weathered four drawdowns of more than 50%. Some of them 70, 80% crazy. Each was a redistribution event. It’s a key piece. Each was a redistribution event, not the end.

What do I mean by redistribution? Well, the old saying in investing is that you’re supposed to buy low and sell high, right? Easier said than done. What most will do is they buy high because they’re here and everyone making money. And then they sell low. And they’re redistribution going from the weak hands, the impatient hands to the strong patient hands redistribution. Recoveries take time, six months, but the system rewards endurance over timing. So we might have to weather in this, we have to weather this drawdown and it could take six months.

So what? Have endurance. Now, one of the first rules of investing and Warren Buffett says don’t lose money, but you’re always going to lose so many investing. It’s impossible. But what that what I think is the most important rule of investing is never be a forced seller. So what does that mean? That means that if I’m impatient, let’s say that I needed the money in 30 days to pay for college tuition or pay my taxes or pay for a wedding. I needed 60 days, 90 days.

But then it dips. Shoot, I need the money right now. I don’t have the time. I don’t have the endurance to wait for it to get back up. I got to sell right now. Well, then I’m going to take the loss. So what we want to do is we want to think about our time and money and how it relates to volatility. So what do I mean about time and volatility? So the lower the volatility cash being zero to one bonds, one to four S&P, etc, is the timeframe that I have to wait or think about.

So for example, there’s been no point in Bitcoin’s history that you could have bought any peak and not been back in profit within four years. So it’s like a four year asset. With real estate, the saying was always don’t buy a house that you don’t plan to hold at least for five years. So you want to think about the money that you have and the timeframe that you needed. So for example, again, if I have to pay something in 30, 60, 90 days, I don’t want to put that in something highly volatile, a four year asset, I want to put into a low vol asset like cash or money market or bonds.

If I have money that can sit for longer a year or two, maybe that goes in like S&P 500 and as they can sit even longer four years or more, it can go into Bitcoin. The problem comes when I’m trying to take a high vol asset like Bitcoin, long duration, four years and apply a three month or six month timeframe to it. That’s the problem. Now, the other thing is back to the myth of the perfect timing. So again, in hindsight, you’re like, Oh, why don’t I just sell here and buy back in here? Here’s why you ever heard the saying, never try to catch a falling knife.

That’s a term that we talk about in investing is that when markets are going down, we’re not trying to time the bottom and catch it perfectly. Typically in investing, what you’d want to do is wait for the bottom to form show that there’s signs of a bottom forming and it’s coming back up and then we come back in. So we’re not trying to time the bottom and catch a falling knife, wait for the knife to hit and then pick it up. But here’s the problem with Bitcoin.

The problem with Bitcoin is because it’s so volatile because it has so much energy, it has so much vitality, it moves really, really fast. And what happens is if you miss the best day, you miss most of the returns. And as a matter of fact, the best day is typically right after the worst day. So you’d literally be having to catch or trying to catch falling knives constantly to get it. Let me give you an example here. So in Bitcoin, the 2021 bull market, we saw that over the top 10 days, the return if I was in in the market during the top 10 days, I made 179% return.

If I take the top 10 days out the other 355 days, I would have lost 43%. So the cost of sitting out of those days means that I was taking a loss even in bull market, even in this great return, because remember, the price is going like this. So if I miss these best days, my returns get cut in half. Now, the same is true in the S&P 500. But it’s not as volatile. So it’s not as critical. So S&P 500 historically annualized is 9.2%.

So in the S&P 500, if you look at over decades, it’s about a 9% return. However, if I missed just the 10 best days in the S&P 500, my returns were cut in half from 9% to 5%. Even S&P 500. But again, because Bitcoin is so much more volatile, so much more vital than just missing the 10 best days take me from a huge profit, 179, not 9, 179, but take me from that to a loss. And that’s why we don’t want to get out of the market.

We just want to hold through the volatility or even better yet, use the down parts to add to our positions. Because we have conviction because we have our own thesis. Okay, why waiting feels safe and it isn’t. So fear convinces investors that waiting is prudent, but volatility says step aside until it’s safe. So right now people are like, Oh, the market’s too dangerous. It used to be 125 right now. It’s I don’t know, 85, 88,000, 90,000. But I don’t know, it could go lower.

It’s unsafe right now. So I’ll wait, I’ll wait. I don’t want to catch the falling knife on a wait till it reforms. But the biggest updates, as I just said, are the, the cluster during the highly volatile part. So when you step aside and you wait, then you’re basically saying I’m willing to just wait and miss the biggest return days. That’s what you’re basically saying, which of course, you don’t want to do that. Let’s just reframe this whole narrative just so I can set it right in your brain.

Okay. Bitcoin’s volatility isn’t a bug, but it’s too volatile. That’s a good thing. It’s the system working as it’s designed. We have a fixed supply asset going through a monetary transition. It’s going to be volatile. That’s the design. I want it to outperform everything, but I have to understand that it’s going to be a little bit volatile. It’s going to be lively. It represents pure price discovery. That’s what we’re seeing right now. A fixed supply asset being absorbed by or absorbing the monetary system.

It’s occurring under conditions of absolute scarcity. It’s the mechanism that redistributes wealth from the inpatient who can’t stomach the volatility to the patient people like me who are going to sit back and just wait. Okay, finally, the final perspective that I want you to leave this with volatility, it’s always going to exist. It exists in everything. There’s never been an asset that I’ve ever seen in the history of the world that has gone up in a straight line or even down a straight line.

Even when an asset is crashing, it still has bounces. Okay, so volatility is always going to exist. It’s the heartbeat of a living monetary network. It’s always going to feel uncomfortable because it’s always going to challenge your assumptions. And it’s always going to pull on our emotions, which are highly attuned to risk and and try to remove our rational thought behind it. The market consistently removes participants who rent the price. So warm up. It says I don’t buy stock.

I don’t buy the price. Those the market participants who rent the price versus who own the protocol, who own the asset, who own the company. That’s what Warren Buffett said. All right. Now, if you want to know how I use Bitcoin and its 50 vol asset, its high returns to leverage that asset to use the same wealth strategy that the 1% use that were only available to the 1% until we got the cheat code. What I think Bitcoin is is high vol asset.

You might want to check out the live event I’m doing called the wealth operating system accelerator. I’m from the stage for a couple of days. There’s a link down below here if you want to check it out and put a QR code on the screen right here where learn how to take Bitcoin and then put it into a wealth accumulation strategy and what I call the wealth OS. So check out the link down below. We’re gonna do it all live.

It’s going to be workshop style so you can do the work while you’re watching along. I’m only going to do it one time in 2026. So don’t miss it. Check it out. And that’s what I got. All right. Don’t say your Bitcoin. Hold on to your success. I’m out. [tr:trw].

See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.