In several previous posts, we’ve looked at broader market cycles and Bitcoin's 4-year cycles. If you haven’t yet seen those, check them out here.

This time, we’ll explore the Bitcoin 4-year cycle and its relationships to broader economic cycles. Understanding these cycles gives you a superhuman investor edge over the public.

This 4-year inflation cycle chart provides valuable insights into the economic patterns affecting everything, including the market, your stock portfolio, and even your grocery bills.
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As Nobel prize-winning economist Milton Friedman said, “inflation is created by government” and is “always and everywhere a monetary phenomenon.”

When inflation becomes a problem, central banks tighten the money supply, restricting public access to money. They also increase short-term interest rates to disincentive further borrowing. When inflation is under wraps and economic growth is on the horizon, they lower short-term interest rates and ease restrictions to stimulate growth.

This tightening and loosening monetary policy cycle is foundational to how the Bitcoin cycle works.

Satoshi Nakamoto, Bitcoin's creator, introduced the halving to control inflation and ensure Bitcoin remained a deflationary asset. The event occurs every four years, cutting the reward for mining new blocks in half.

The Bitcoin halving mirrors the broader money cycle and reduces the supply of new Bitcoins every four years, creating predictable periods of Bitcoin price increases and market changes.

The stock market and economy often move ahead of the business cycles, helping to anticipate future economic conditions. In a previous blog post we talked more about this sector rotation model and how it works. 

Click here to view the complete market cycles cheatsheet, including ten market cycles, sector rotation, and seasonality.

If you’re a farmer, you plant seeds in the spring and harvest in the fall. Bitcoin investing follows a similar seasonal logic. If you understand this cycle, you can plant your investment seeds during the downturns and harvest profits at the peaks.

Cognitive dissonance is a powerful behavioral force. Most people are utterly blind to these cyclic patterns staring at them. By learning and accepting these cycles, you can gain an incredible edge over the public. You won’t get sucked into buying at market tops, and instead, wait patiently for the discounts that come during the down cycles.

Don’t chase after the latest hype coins and assets, especially if their value is skyrocketing or plummeting. Most people mistakenly think, “This time is different,” at the tops and bottoms of markets, but as Mark Twain says, "History doesn't repeat itself, but it often rhymes."

Mastering the concept of cycles can make you feel like a superhuman investor. Understanding the 4-year cycle and seasonal trends allows you to anticipate and capitalize on market movements, avoid buying at peaks, and learn when to capitalize on low entry points.

​If you're new to this topic, I encourage you to read our previous posts for more foundational knowledge.

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