How Much Bitcoin Should You Have By This Stage In Your Life?

Summary

The video script discusses the growing competition for acquiring Bitcoin, dubbed the 'Bitcoin Rush', as mainstream investors join the race. It suggests that individuals should aim to accumulate Bitcoin before retirement, proposing a framework based on median family net worth by age and investment studies by Grayscale and Vanic. The script recommends a 5% Bitcoin allocation in one's portfolio, with specific amounts suggested for different age groups. It also highlights the increasing difficulty of diversifying traditional portfolios and the benefits of Bitcoin's low correlation with stocks and bonds, positioning it as a valuable addition to long-term investment strategies.

Takeaways

• 🌐 There is a global rush to acquire the remaining Bitcoin, with mainstream investors joining the race.
• 💼 The competition for Bitcoin is becoming fierce, suggesting that individuals should aim to acquire Bitcoin while they can.
• 🤔 The video prompts viewers to consider how much Bitcoin they should have at their current life stage.
• 📊 The script uses data from Statistics Canada to establish a framework for savings by age group.
• 🏡 The median net worth for different age groups is highlighted, showing that younger generations have a lower net worth but more potential to catch up.
• 📈 The video explains the difference between median and mean values in statistics to clarify the data presented.
• 💼 Investment management firms like Grayscale and VanEck have conducted studies on the ideal Bitcoin allocation in a portfolio.
• 📊 Studies suggest that including Bitcoin in a portfolio can increase gains, especially with allocations of 0.5% to 3%.
• 💰 Grayscale recommends a 5% Bitcoin allocation for optimizing a portfolio's risk-adjusted returns.
• 📉 The video acknowledges increased volatility risk with higher Bitcoin allocations, especially in the short term.
• 🚀 The script projects Bitcoin holdings by age bracket based on the median net worth and a 5% Bitcoin allocation.
• 🌟 The video discusses the importance of Bitcoin in a long-term investment portfolio due to its control, diversification, and deflationary nature.

Q & A

What is the 'Bitcoin Rush' mentioned in the script?

The 'Bitcoin Rush' refers to the ongoing scramble for the remaining available Bitcoin, as significant investment is chasing an ever-shrinking amount of this cryptocurrency. It's a race among various investors, including mainstream investors like hedge funds and asset management firms, to acquire as much Bitcoin as possible.

What is the purpose of joining the 'Bitcoin Basics members Club'?

Joining the 'Bitcoin Basics members Club' gives members access to a high-signal members-only chat room and other exclusive content, providing a community for like-minded individuals interested in Bitcoin.

Why is it suggested that every individual's goal should be to acquire Bitcoin?

The script suggests that acquiring Bitcoin should be a goal because of the increasing competition and the potential for Bitcoin to become a valuable asset as the supply is limited and demand is rising.

What is the median family net worth by age and how is it used in the script?

The median family net worth by age is a report by Statistics Canada that provides data on the typical wealth accumulation at different life stages. The script uses this data to establish a framework for determining how much Bitcoin one should have in their portfolio based on their age.

What is the difference between mean and median values in statistics as explained in the script?

The median is the middle value when all net worths are lined up from least to most, representing the central tendency. The mean, on the other hand, is the average net worth calculated by adding up everyone's net worth and dividing by the number of people, which can be skewed by very high or low values.

What are the two frameworks needed to determine how much Bitcoin one should have in their portfolio?

The two frameworks are: 1) determining how much savings one should have in general at a given age, and 2) determining what percentage of that savings should be in Bitcoin.

What does the study by Vanic suggest about including Bitcoin in a traditional portfolio?

The Vanic study suggests that including Bitcoin in a traditional portfolio of 60% equity and 40% bonds can increase gains. The more Bitcoin added, the higher the gains, with the most significant gains seen in a portfolio with 3% Bitcoin.

What is the recommended percentage of Bitcoin in a portfolio according to Grayscale Investments?

Grayscale Investments suggests that an allocation of approximately 5% of Bitcoin in a portfolio may help to optimize a typical portfolio's risk-adjusted returns.

How does the script suggest determining the amount of Bitcoin one should have based on age?

The script suggests using the median net worth for a working family at different age brackets and applying a 5% Bitcoin allocation to determine the amount of Bitcoin one should have in their portfolio.

Why is it becoming more challenging to build a diversified portfolio from traditional asset classes?

It is becoming more challenging due to lower bond returns, narrowly concentrated gains in equities, higher correlations across assets, and macro risks, making traditional asset classes less effective for diversification.

What are the benefits of adding Bitcoin to a long-term investment portfolio?

Adding Bitcoin provides a level of control over one's portfolio, offers a path out of stagnation experienced with traditional assets, and has a low correlation with stocks and bonds, which can help mitigate risks in a diversified portfolio.

Outlines

00:00

🚀 The Bitcoin Rush: Mainstream Adoption and Investment Strategies

This paragraph discusses the global phenomenon of the 'Bitcoin Rush,' where a dwindling supply of Bitcoin is being aggressively pursued by a variety of investors, from tech enthusiasts to mainstream financial institutions. It emphasizes the importance of acquiring Bitcoin before retirement and prompts viewers to consider their personal Bitcoin holdings relative to their life stage. The script introduces a framework for determining Bitcoin investment based on median family net worth by age, suggesting that every individual should aim to accumulate Bitcoin proportional to their savings. Additionally, it highlights the recent approval of Bitcoin ETFs by regulatory bodies, indicating a growing institutional interest and the potential impact on Bitcoin's accessibility and value.

05:01

💰 Bitcoin Allocation in Portfolios: Age-Bracket Recommendations and Market Trends

The second paragraph delves into the specifics of how much Bitcoin one should hold based on age, using data from Statistics Canada and investment studies by Grayscale and VanEck. It suggests that a 5% allocation of Bitcoin in a portfolio can optimize risk-adjusted returns. The script provides estimated Bitcoin holdings for different age groups, assuming a median net worth and a Bitcoin price of $70,000. It also discusses the increasing demand for Bitcoin due to the approval of ETFs and the declining supply as mining rewards halve, predicting a potential rise in Bitcoin's value. The paragraph concludes by emphasizing the benefits of including Bitcoin in long-term investment portfolios, such as providing control over one's investments and offering diversification against traditional asset classes that are becoming less effective in delivering returns.

Keywords

💡Bitcoin Rush

The term 'Bitcoin Rush' refers to the current competitive and intense pursuit of acquiring Bitcoin by various investors worldwide. It is a central theme of the video, illustrating the urgency and competition among different types of investors to secure their share of the diminishing supply of Bitcoin. The script mentions that this rush involves everyone from tech enthusiasts to mainstream investors like hedge funds and asset management firms.

💡Mainstream Investors

Mainstream investors are a broad category of financial players that includes hedge funds, asset management firms, and endowments. In the context of the video, they represent the shift from early Bitcoin adoption by niche groups to a more widespread interest from larger, more traditional financial entities. The script indicates that these investors are now actively participating in the 'Bitcoin Rush'.

💡Portfolio

A portfolio in finance refers to a collection of financial assets such as stocks, bonds, and in this case, Bitcoin. The video discusses the ideal composition of a portfolio, particularly the percentage of it that should be allocated to Bitcoin to optimize risk-adjusted returns. The script uses the term to explore the allocation strategies suggested by investment management firms like Grayscale and Vanic.

💡Median Net Worth

Median net worth is the middle value of net worth when all values are lined up in ascending order. It is a statistical measure used in the video to establish a benchmark for how much savings a person should have at different ages. The script references a report by Statistics Canada to compare individual savings with the median net worth for their age group.

💡Mean vs. Median

The video clarifies the difference between mean and median values in statistics, with the help of Bing AI. Mean net worth is the average calculated by summing all net worth and dividing by the number of people, while median is the middle value. The script uses this distinction to explain why the median net worth is a more accurate representation of typical savings at various ages.

💡Equity

Equity in finance refers to ownership interest in a company represented by shares. The video discusses an ideal portfolio composition suggested by investment firms, which typically includes a significant percentage of equity. It is used in the context of portfolio diversification and the inclusion of Bitcoin to enhance returns.

💡Bonds

Bonds are debt securities that represent a loan made by an investor to a borrower, usually at a fixed interest rate. In the video, bonds are contrasted with equities as part of an ideal portfolio composition. The script mentions that the ideal portfolio is composed of 60% equity and 40% bonds, highlighting the traditional asset allocation strategy.

💡Volatility

Volatility in the context of finance refers to the degree of variation of a trading price series over time. The video discusses the increased volatility risk associated with having a higher percentage of Bitcoin in one's portfolio, especially in the short term. It is a key consideration in the decision-making process regarding Bitcoin investment.

💡ETFs (Exchange Traded Funds)

ETFs are investment funds that are traded on stock exchanges, much like individual stocks. The video mentions the approval of Bitcoin ETFs by various regulatory bodies, which has increased the demand for Bitcoin and made it more accessible to investors. The script uses ETFs as an example of how financial instruments are adapting to include Bitcoin.

💡Deflationary

A deflationary asset is one that increases in value over time due to a reduction in supply. The video describes Bitcoin as a deflationary asset because its supply is capped, and it becomes increasingly scarce as more of it is mined. This characteristic is contrasted with traditional assets like stocks and bonds, making Bitcoin an attractive investment option.

💡Correlation

In finance, correlation measures the degree to which two securities move in relation to each other. The video discusses the low correlation of Bitcoin with stocks and bonds, which is beneficial for diversification. It suggests that including Bitcoin in a portfolio can reduce overall risk because it does not typically move in tandem with other assets.

Highlights

An ongoing scramble for the last remaining Bitcoin is being referred to as the Bitcoin Rush.

Mainstream investors, including hedge funds and asset management firms, are now joining the Bitcoin rush.

The video suggests that acquiring Bitcoin should be a goal for individuals before retirement.

The video will use data to determine how much Bitcoin one should have based on age.

Median family net worth by age is used as a framework for general savings.

The median net worth for people under 35 is notably low, indicating a chance to get ahead.

Older generations have benefited more from compound growth due to longer time in the market.

The difference between mean and median values in statistics is explained with the help of Bing AI.

Investment Management firms have conducted studies on the ideal Bitcoin allocation in a portfolio.

Studies show that adding Bitcoin to a portfolio can increase gains, especially in the short to medium term.

Grayscale Investments suggests an ideal Bitcoin allocation of 5% in a portfolio.

The Bitcoin amount one should hold varies by age group, with specific amounts suggested for under 35, 35-45, 45-54, and 55-65.

The approval of Bitcoin ETFs by the SEC and other jurisdictions increases demand and makes Bitcoin more costly.

Bitcoin is deflationary and has a low correlation with stocks and bonds, offering diversification.

Traditional asset classes are becoming harder to diversify due to lower bond returns and higher correlations.

Bitcoin offers control over one's portfolio without relying on institutional decision-making.

The video concludes by questioning if viewers have stacked enough Bitcoin and what might be holding them back.

Transcripts

all over the world significant

investment is chasing an Ever shrinking

amount of Bitcoin have you been paying

attention there is an ongoing Scramble

for the last remaining Bitcoin you can

call it the Bitcoin Rush In the

Beginning it was mostly Cipher punks

Tech enthusiasts and obscure investment

firms that were buying Bitcoin fast

forward to today and mainstream

investors including hedge funds Asset

Management firms and endowments have

joined the rush to buy up as much

Bitcoin as they can get their hands on

the company comption is about to become

Cutthroat so it only makes sense that

every individual's goal in life should

be to acquire as much Bitcoin as

possible while they have the energy to

work before they reach retirement age

the question that you should be asking

yourself is how much Bitcoin should I

have by this stage in my life if you

have an answer to this question let me

know down in the comments meanwhile stay

tuned until the end of the video where

we use existing data to determine how

much Bitcoin you should have saved based

on your age group before before we jump

in if you're new around here or just

beginning your Bitcoin journey be sure

to hit the like button and subscribe to

never miss out on the latest videos from

Bitcoin Basics if you want to be a part

of a community of other like minded

individuals in Bitcoin consider hitting

the join button on this video to join

the Bitcoin Basics members Club as a

member you'll get access to our high

signal members only chat room and other

members only content and finally this

video is for entertainment purposes only

and should not be taken as Financial

advice with that out of the way let's

get started now depending on your age

how much Bitcoin should you be holding

in your portfolio to answer this

question we need to establish two

Frameworks one is how much you need to

have as Savings in general at what age

and the second is what percentage of

that needs to be in Bitcoin the first

framework we borrowed from the median

family net worth by age a report

prepared by statistics Canada a

government agency headquartered in

Ottawa that produces statistics on

population resources economy and Society

the first noticeable trend from this

table is that the median net worth for

people under 35 seems very low if it

seems low to you that is a good thing it

means that you are ahead of your peers

at a young age it is easy to get ahead

as you age however it takes much more

wealth to stay ahead nevertheless the

oldest generation has had the longest

amount of time in the market to

accumulate assets they bought their home

and have since paid it off they have

reached the peak earning years of their

careers most importantly they've

benefited the most from the eighth

wonder of the world compound growth now

at this point I should probably take a

moment to describe the difference

between mean and median values in

statistics to help explain the

difference I asked Bing AI for help and

this is what it told me median net worth

is like the middle value when you line

up everyone's net worth from least to

most it's the middle class of net worths

mean net worth is the average where you

add up everyone's net worth and divide

by the number of people it's like that

one rich friend who skew the bill at

dinner now after we have established the

savings you need to have for the age

group you are in let's establish the

framework that will guide us and

determining what percentage of that

portfolio needs to be in Bitcoin two

notable Investment Management firms

grayscale and vanic have conducted

extensive studies on this topic their

studies assume that the ideal portfolio

is composed of 60% equity and 40% bonds

vanic extrapolated returns in a

portfolio with 60% equity and 40% bonds

and compared it to three other scenarios

in which Bitcoin is included the three

scenarios contained model portfolios

containing

0.5% 1% and 3% Bitcoin respectively the

study showed that the more Bitcoin was

added the more gains were realized the

most gains were realized in the third

scenario both in the short and medium

term up to 5 years while the portfolio

without Bitcoin had annualized returns

of

99.4% the portfolio with 0.5% Bitcoin

returned

99.95% that with 1% returned

10.65% and the one with 3% Bitcoin

returned

13.45% this study does not indicate at

what point a negative Trend could start

to be seen but it does indicate that in

general Bitcoin has been one of the best

performing assets which means that

having more of it in a portfolio might

not have a significant negative impact

especially in the long term however with

more Bitcoin in your portfolio we must

contend with increased volatility risk

especially in the short term for its

part grayscale Investments suggests that

5% of Bitcoin is the ideal amount to

have in your portfolio every investor

has unique goals and should consider

their own circumstances but an analysis

by grayscale research suggests a Bitcoin

allocation of approximately 5% % may

help to optimize a typical portfolio's

risk adjusted returns and with that

let's get to the part you have all been

waiting for if we take 5% to be the most

ideal as suggested by grayscale

Investments the Bitcoin you should have

in your portfolio should translate as

follows according to your age bracket if

you are under 35 years old today based

on the media net worth of a working

family between you and your significant

other you should have roughly

0.027 Bitcoin your portfolio that is

assuming the price is at $70,000 per

Bitcoin if you are between 35 and 45

years old you and your partner should

have at least 0.13 Bitcoin in your

portfolio if you are between 45 and 54

you and your family should have saved

about 0.28 Bitcoin if you are 55 65

congratulations you have worked a long

and successful career and likely have

much to show for it based on the media

net worth of your cohort you may have

0.37 Bitcoin in your portfolio that is a

lot these predictions start to get very

fun when you extrapolate the price of

Bitcoin into 2030 and Beyond of course

this does not mean that you cannot save

more Bitcoin if you have developed your

conviction in Bitcoin as an asset and

have been accumulating the digital gold

for a while you likely have Bitcoin

worth more than your entire Savings in

other asset classes the investment case

for Bitcoin in early January 2024 the US

Securities and Exchange Commission SEC

approved over 10 Bitcoin exchange traded

funds ETFs which have been on a buying

spree ever since while 900 Bitcoin are

mined daily the ETFs alone demand as

much as 3,000 Bitcoin daily meanwhile

other jurisdictions have joined the US

in approving ETFs and similar financial

instruments in April 2024 Hong Kong

Securities and Futures commission

approved its first Bitcoin ETFs and the

financial conduct Authority the UK's top

Financial regulator approved Bitcoin

exchange traded products in late May the

adoption of spot Bitcoin ETFs worldwide

have changed the game around Bitcoin and

will make getting your hands on bitcoin

even more costly the fact that the

supply of Bitcoin or digital gold is

declining at a fast rate especially with

the reward having while the demand is

skyrocketing makes that possibility even

more real but why is it important to

consider adding Bitcoin to your

long-term Investment Portfolio owning

Bitcoin is one of the few investment

options that gives you some level of

control over your portfolio other

options in particular stocks and bonds

require you to rely to a large extent

upon the wisdom and decision-making

processes of Institutions whose running

you have a very limited say meanwhile

Bitcoin offers a path out of the

stagnation that investors have started

to experience increasingly with

portfolios that contain only traditional

assets according to the investment firm

grayscale it is getting harder to build

a diversified portfolio from traditional

asset classes because of several factors

building a diversified portfolio has

gotten harder due to lower Bond returns

narrowly concentrated gains in equities

higher correlations across assets and

macro risks for a long time stocks and

bonds were the primary assets that one

was encouraged to include in their

portfolio especially when considering

viable returns in retirement however

Equity gains are becoming increasingly

narrow meanwhile after four Decades of

decline the Resurgence of inflation has

resulted in stunted Returns on bonds and

similar assets but it could be argued

that the high correlation among the

traditional asset classes stands out as

the most challenging obstacle to the

average person's saving or investing for

retirement the options available to

large investment firms such as real

estate private equity and Venture

Capital to mitigate High correlation are

difficult for the ordinary sa to access

invest a IA defines correlation in

finance and investment as a statistic

that measures the degree to which two

Securities move in relation to each

other in essence High correlation means

that two or more assets are generally

exposed to the same risks and therefore

cannot mitigate one another's potential

losses Bitcoin is deflationary and

equally notable it has a low correlation

with stocks and bonds and it is

accessible to the ordinary saver as one

can easily acquire and self- custody it

so have you stacked enough Bitcoin based

on your age group if not what do you

think has held you back if you enjoyed

this video check out my video which lays

out the Bitcoin retirement strategy

video in four simple steps