When I say “everything correlates to 1.0” I mean all asset correlations converge toward perfect positive correlation during panic selling.

Normally, different assets move independently or inversely (stocks vs bonds, crypto vs gold, etc). But in a liquidity crisis, institutions and investors are forced to sell everything they can to raise cash…margin calls, redemptions, meeting obligations, etc.

So you get indiscriminate selling across all risk assets simultaneously. Bitcoin, stocks, gold, real estate, bonds, they all dump together because people need dollars/liquidity NOW. The usual diversification benefits disappear.