Bitcoin vs War and AI!

Stefan Molyneux

Philosopher Stefan Molyneux breaks down Bitcoin's 20% crash from its October 2025 peak amid geopolitical fires and inflation panic, revealing fiat's endless devaluation, centralization's corruption and Bitcoin's no-bailout power for true financial freedom.  0:00:00 Bitcoin's Current Struggles  0:02:04 Shifts in Investment Trends  0:04:04 The Impact of Geopolitical Tensions  0:05:23 The Uncertainty of AI Hype  0:09:27 Closing Thoughts and Future Outlook   GET FREEDOMAIN MERCH! https://shop.freedomain.com/  SUBSCRIBE TO ME ON X! https://x.com/StefanMolyneux  Follow me on Youtube! https://www.youtube.com/@freedomain1  GET MY NEW BOOK 'PEACEFUL PARENTING', THE INTERACTIVE PEACEFUL PARENTING AI, AND THE FULL AUDIOBOOK! https://peacefulparenting.com/  Join the PREMIUM philosophy community on the web for free!  Subscribers get 12 HOURS on the "Truth About the French Revolution," multiple interactive multi-lingual philosophy AIs trained on thousands of hours of my material - as well as AIs for Real-Time Relationships, Bitcoin, Peaceful Parenting, and Call-In Shows!  You also receive private livestreams, HUNDREDS of exclusive premium shows, early release podcasts, the 22 Part History of Philosophers series and much more!  See you soon! https://freedomain.locals.com/support/promo/UPB2025

Transcript

00:00Hey, everybody, this is Femmolyne from Free Domain. Bitcoin down! This is late March 2026.

00:06It's sliding, and it's not some isolated crypto drama. It's, of course, bigger stuff that's going

00:12up and down in the entire financial world. So Bitcoin is down, I guess, more than 20%

00:18or so for the year. So far, it's a long way down from the peak above 125,000 US. It

00:25hit back in

00:25October of 2025. Now, of course, if you've been around the space for a while, you know this asset

00:31often rides waves of optimism and terror. Fear is winning at the moment, and the reasons go well

00:37beyond the usual headlines about whales or tweets or diamond or paper hands and so on. Of course,

00:44the spark for this latest drop is geopolitical tension in the Middle East. In early March,

00:49the United States and Israel launched a major, well, launched major strikes on Iran, part of what some

00:55called Operation Epic Fury. But retaliatory moves followed, even though there are now talks of

01:00de-escalation, the uncertainty lingers. That pushed oil prices higher because, of course, everybody

01:05worries about supply disruptions through key routes like the Strait of Hormuz. Higher oil, of course,

01:13higher oil costs feed straight into inflation fears in the US. When inflation looks sticky,

01:19investors assume the Fed will keep interest rates higher for longer instead of cutting them

01:23aggressively. Higher rates, of course, make borrowing more expensive for businesses and

01:28consumers, which cools economic growth and makes risky investments, i.e. stocks or Bitcoin less

01:35attractive. Now, Bitcoin has been moving do-si-do almost in lockstep with the broader stock market

01:42lately. Its price correlation with the S&P has climbed to some of the highest levels we've seen

01:46this year. Of course, this means when stocks sell off on bad news, Bitcoin tends to follow.

01:52And right now, of course, stocks are under pressure from the same cocktail of oil spikes,

01:56inflation worries, and caution. Tech shares in particular have taken hits after some softer

02:01earnings reports that dented the AI hype narrative. Investors are rotating out of high-growth,

02:06high-risk bets, and into more defensive areas. And, yes, of course, this is something that always

02:13comes along with war. There is a stampede towards defense stocks. Companies have built weapon systems,

02:20fighter jets, missiles, and military technology have seen sharp gains. Names like Lockheed Martin,

02:26RTX, used to be called Raytheon, Northrop. Grumman jumped several percent in single trading sessions

02:33back in early March when the conflict news hit. Their stocks hit fresh yearly highs because the

02:39market expects governments to ramp up military spending if, and I now assume when, one to two

02:45years at least, tensions drag on. In a world of uncertainty, these feel like direct beneficiaries

02:50rather than pure risk assets. It's a classic flight to sectors that thrive when the world

02:55heats up with the weapons of war. Other big market movers are piling on the pressure for Bitcoin,

03:01specifically smart Bitcoin exchange-traded funds. Those easy-to-buy baskets that let traditional

03:07investors get exposure without owning the coins directly have seen billions of dollars flow out

03:11since late last year. Institutions have piled in during the 2025 bull run are now selling,

03:16or at least stepping back. That creates a self-reinforcing loop. Selling drives prices

03:22lower, which triggers more selling. We've also seen forced liquidations, where leveraged traders

03:26get automatically unwound when prices drop past certain levels, and recent options expirations

03:32added extra spicy volatility. On top of that, there's the, it feels like almost omnipresent,

03:39regulatory fog. A key bill called the Clarity Act was supposed to set clear rules for crypto trading

03:45and decide which digital assets count as securities. It's now stalled in Congress,

03:51partly because of a controversial provision that would limit yields on stablecoins. Those are the

03:56dollar-pegged tokens meant to be the steady backbone of the crypto world. Without clear pro-crypto rules,

04:03some big money players are hitting pause. So if you put all this together, Bitcoin is behaving

04:08exactly like what it has become in 2026, a high beta risk asset that amplifies whatever the stock

04:15market is doing. Gold and silver, which sometimes act as safe havens, have been volatile as well.

04:22Racing to records, then crashing, which only added to the risk-off mood. Treasury yields are climbing

04:28towards the early highs, signaling those higher for longer rate expectations. And weekend trading

04:34liquidity is always thin, so moves get exaggerated. None of this, of course, in my personal opinion,

04:41is permanent doom and gloom. Remember, I'm just an amateur. None of this is trading advice. Do your

04:48own research, make your own decisions. Markets turn, tensions can cool, and rate expectations can shift.

04:54But right now, the slide in Bitcoin reflects a broader story. Investors are nervous about inflation,

04:59geopolitics, and the pace of economic growth. So they're selling what feels risky, and buying what

05:04feels protected or directly tied to conflict. Defense stocks are one clear winner, sadly, in that

05:11rotation. If the Middle East headlines improve, and the Fed signals any dovish tilt, we could see a

05:17rebound. But now, though, the forces at play are macroeconomic and geopolitical, not just crypto-specific

05:22noise. Keep that in mind as you watch the charts. And, you know, when stuff's going down, I just expect

05:29it to go down enormously. And thus, if it only goes down a little bit, I'm happy. I would also

05:36say that

05:37in the economy as a whole, there is a big, big uncertainty, which is, and this sort of reminds me

05:46of

05:46the 90s, with Pets.com and the internet bubble, there is a big question, which is, is the AI hype

05:52going to pan out? Companies are going to make a lot more money if they can replace people with AI.

06:01Unfortunately, moving from a raw meritocracy towards politically-based hiring, or quota-based hiring,

06:10has, I mean, this is very sad and very tragic, but what it's done is it has exposed a lot

06:15of

06:16people to market corrections in those hiring practices. In other words, if you have hired

06:22people not based upon a meritocracy, it is far more economically attractive to replace them with AI.

06:28Is AI going to pan out? Is it going to pay out? You hear a lot of back and forth.

06:35Some people say

06:35it's the greatest thing since sliced bread. Other people say it's a giant waste of time, effort, and

06:39energy, and the misallocation of resources, fair enough, based on hype, is a consistent pattern

06:47in the economy as a whole. Stuff gets hyped up, people go nuts, especially people who don't really

06:52know what's going on, and it's really hard for any individual investor or group of investors to know

06:56what's going on with AI. Is it hype? Is it real? Is it not? There's no, it's impenetrable, right? They

07:01just have to rely on reports. If those reports seem good, in other words, if people are firing people,

07:06people are firing employees, make that a little more clear, sorry. If managers are firing employees

07:12based on the productivity of AI, then those companies that do that first, if AI pans out,

07:19will go up enormously in value. If companies are firing employees based upon the hype of AI,

07:25and it turns out that AI is not as productive as is expected, then those companies are going to be

07:33crippled. And other companies that hang on to their employees will do a lot better. Once a

07:39company goes through a whole bunch of layoffs, like it lays off five, 10% of its workforce or 15

07:43%

07:44of its workforce, people don't want to work there anymore, because they're concerned that they're

07:48just going to get laid off again. So you kind of cripple that implicit contract between the high

07:52talent you need to make money and your own company if you just went through a bunch of layoffs.

07:57So is it going to work out a lot of the outsourcing stuff? You know, you take all your code

08:03base and

08:04you ship it somewhere far overseas in muggy weather. That didn't really pay out for a lot

08:11of companies because they ended up getting costs cut in the short run. But the maintenance costs of

08:16badly written spaghetti code turns out to be too high. So it's always with the economy,

08:23there's this bunch of hype, this great thing is going to cut all these costs, it's going to be

08:26super efficient. And occasionally, of course, it's true. But a lot of times it's not. And so

08:31there's this huge uncertainty about what's going to happen with AI. And because, you know, every dollar

08:39you invest in one company is not invested in crypto, because all this money is flowing into

08:43companies based upon AI hype. If that AI hype proves real, that will slow down over time as it just

08:51becomes the new norm, which means more money is available for crypto. If it turns out to be false,

08:55then people will withdraw money from those companies. They might, of course, put it into

09:00war stocks, they might put it into other companies that didn't go through the AI bubble or hype.

09:05Some of it might go to Bitcoin, but I think that's also a factor at the moment. And it's going

09:10to take a

09:10while to figure things out, because the companies that invest in AI are saying it's the greatest thing

09:15ever, because they want that investment money. And the companies that didn't invest as much in AI

09:20are saying it's a hype and it's a bubble. And it's just going to take time to figure it out.

09:25No

09:26individual can do it themselves. All right, hope that helps. Hope that makes sense.

09:30fredomay.com slash donate. Take care, my friends. Bye.

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