Podcast

Bitcoin's 4-year Cycles Are Over - E234

This is a quick episode to address a question about why I was labeling the market cycle timing as a 2-year cycle instead of the commonly understood 4-year cycle.

This is a quick episode to address a question I received via Twitter DM from a reader of the weekly newsletter. He was wondering why I was labeling the market cycle timing as a 2-year cycle instead of the commonly understood 4-year cycle.

There are two big reasons for the waning of the 4-year cycle. 1) The halvings have less of an absolute disruptive effect as they become less dramatic of a change, 2) we have the experience of 3 halvings now to help us estimate the effect of each halving.

The new cycle will be approximately 18 months to 2 years in length, and driven by normal market factors. Price discovery will cause flucuations in the price around a generally increasing trend toward monetization. Consistent savings into bitcoin and the network effect will act to push the price up this general upward slope in value. Legacy market cycles will affect market psychology and price behavior will take on some of the characteristics of the recent marginal saver.

For instance, at the current time, the marginal saver coming into bitcoin are your typical stock market investor. That is why bitcoin seems to be correlated to risk assets/stocks at the current time. However, this will change as the marginal investor becomes billionaires, sovereign wealth funds, nation-states, etc that are buying to as long term store-of-value.