Brief Summary
The video discusses a potential upcoming shift in asset valuations due to Bitcoin's emergence as a superior form of money. It suggests that stocks and real estate, which have been used as a store of value due to the declining value of the dollar, may experience a valuation reset. This reset would lead to capital flowing into businesses with strong cash flows and projects with real ROI, as investors now have Bitcoin as an alternative.
- Bitcoin's fixed supply and increasing adoption are key drivers of this shift.
- The monetary premium embedded in traditional assets may decrease as Bitcoin becomes the global hurdle rate for investments.
- Early signs of this shift include the success of Bitcoin ETFs and corporate adoption of Bitcoin.
Introduction
The speaker introduces the idea that stock and real estate valuations may decrease significantly over the next decade. This potential decrease isn't necessarily negative, but rather a shift in the monetary premium embedded in these assets. For years, people have invested in stocks and real estate not just for yield, but to avoid holding cash, as the dollar loses value over time.
The Problem with the Dollar
The dollar is designed to lose value, causing people to hoard scarce assets that increase in dollar terms. This has pushed valuations higher, not based on productivity, but because the dollar is a flawed currency.
Bitcoin as a Solution
Bitcoin, with its superior monetary properties, offers a solution. Its supply growth is capped at 21 million, with the annual growth rate decreasing over time. By 2035, Bitcoin's supply growth will be significantly lower than the dollar's, making it an attractive alternative.
The Global Hurdle Rate
As Bitcoin adoption increases, it establishes a new benchmark, the global hurdle rate. Investments must outperform Bitcoin to be considered worthwhile, which will change how capital is allocated. The monetary premium will be removed from real estate and equities, and capital will flow into businesses with strong cash flows and projects with real ROI.
Early Signs of the Shift
Early indicators of this shift include the success of BlackRock's iBit ETF, Unchained securing billions in Bitcoin, and companies like Similar Scientific issuing notes to acquire Bitcoin. These are signs that the monetary premium is beginning to flow into Bitcoin.
The Valuation Reset
The speaker concludes that productive businesses and desirable properties will still exist, but they will be valued based on their output, not as a safe alternative to holding dollars. This valuation reset represents a repricing of the global economy around sound money, with Bitcoin as the foundation for a more efficient and productive world.
