Bitcoin is both volatile and cyclical.
You get periods of extraordinary gains. But then you get periods of extraordinary losses. But …
If you can buy during low points in the cycle, that volatility can work in your favour.
And the house view is that we are within a month or two of the low point right here and now.
It might be that the very low was on July 1st at $58,000. It might be that we need to give that price one more retest this autumn. Either way you want to be sure that by November-December, if you haven’t already, you have your long position in place, ready for the next run.
There is nothing worse than watching others enjoy a bitcoin bull market while you’re on the sidelines.
I have made many mistakes over the years, but I do get some things right, and last time around, in August 23, I wrote up Microstrategy, now Strategy (NDX.MSTR) close to the lows, and some readers made twenty times their money. It made me very popular.
I am planning a similar coup this time.
Today, I want to explain the bitcoin cycle, where I think we are in it and how I would get exposure.
If you are one of those people who didn’t buy Bitcoin at $500 or $1,000 and have spent the years since telling people how you could have bought it, but missed out, now is your chance to move on from that story.
And if you are one of those people who says, “I don’t understand it,” and uses that as a reason not to invest, I’m going to address that too.
For the avoidance of doubt, I have some history here. In 2014 I wrote what was, as far as I am aware, the first book about bitcoin published by a mainstream publisher. I have been following this thing for a long time.
“Read it and glimpse into the future,” said Sir Richard Branson. Though it’s not clear he did actually read it.
Bitcoin: the Future of Money? by Dominic Frisby is available at all good bookshops.
The audiobook, which had particularly good reviews, has now been re-released. UK version here. US version here.
I have a target of $200,000 for the next cycle, perhaps 2.5x where we are today. (Bitcoin currently sits around $78,000
But I am going to show you a simple way to play this where the returns could be much, much greater than 2.5x.
So let’s get into it.
The four stages of the Bitcoin cycle
The bitcoin cycle goes something like this
Quiet accumulation.
Rampant bull market and blow-off top.
Monster correction.
Frustrating consolidation.
Then the process starts again.
This cycle is remarkably consistent and quite easy to identify. I think we are currently somewhere between stages 4 and 1, and that is when you want to be getting positioned.
The high came at $128,000 a year ago. Bitcoin was on the front cover of every paper. The US was going to adopt a bitcoin standard and fiat money was on its way out. Something like that. It duly crashed.
Now it’s going to be destroyed by Quantum computing or something. All the talent has left bitcoin for AI. Nobody is talking about it any more. And now, with the Coldcard disaster followed by the Blockstream hack, we have had the requisite failures in major players which mark bear market lows.
The great difficulty with bear markets is psychological. It is easy to buy when it is going up. You get sucked in. It is much harder to buy when everyone is telling you it is finished.
Another simple, but eerily accurate way of playing the bitcoin cycle is the 500-day rule. Buy 500 days before the halving and sell 500 days after it.
A bitcoin halving is when the rewards paid to miners reduces. This happens every four years, and the next one is due around April 2028. We are perhaps 580 days before the next halving.
(One thing I have noticed is that when everyone knows about a cycle, they tend to come earlier, hence my alerting you to this one now and not in 80 days time).
Again it means you want to be positioned before December.
