Imagine a financial instrument whose behavior can be predicted years in advance. Not with absolute precision, since such certainty doesn't exist in finance, but reliably enough to plan strategies years ahead. This sounds implausible in a world where economists win Nobel prizes for barely outperforming random chance, where such predictability would seem almost magical.
Yet Bitcoin has done precisely this. Over 16 years, it has transformed chaotic financial markets into a predictable mechanism. Financial cycles not only exist but can be studied and, more importantly, projected forward rather than merely analyzed in hindsight.
Across three complete four-year cycles, Bitcoin has demonstrated a remarkably consistent pattern. First comes the prolonged bottoming phase, when media outlets compete to write the most vivid cryptocurrency obituaries. Then a tentative recovery, like a bear emerging from hibernation. An explosive rally to new all-time highs amid universal euphoria. And the inevitable finale: a precipitous decline. But never to zero. Instead, to levels that years earlier seemed utterly unattainable. Like the breathing of a vast mechanism.
In this chapter, I'll dissect the anatomy of Bitcoin cycles, exploring the phases of growth and decline and the psychology of participants at each stage. This knowledge helps inform decisions about buying and selling. To be clear: understanding cycles isn't a predictive tool for tomorrow's exact price. It's a compass that helps navigate the four-year journey from despair to euphoria and back.
Cycles surround us everywhere: the changing of day and night, seasons, lunar phases. These cosmic rhythms run through our entire lives like guiding threads, even though they occur somewhere out there, in the boundless expanses of the Universe. Our personal rhythms of sleep, activity, and hormonal cycles are strung upon them like smaller beads. All of life consists of repeating patterns.
Cosmic cycles amaze not only with their grandeur but with surgical precision. Simple mathematical formulas can predict the Moon's position centuries ahead or pinpoint a solar eclipse. Celestial mechanics operates like perfect clockwork on a galactic scale.
It's hard to overstate how our lives would change with such precision in economics and social processes. Financial crises would become as rare as planetary motion failures. We would know in advance: recession in 2087, boom in 2094. Governments would prepare for downturns like astronomers prepare for eclipses, and humanity would avoid countless economic catastrophes.
But our attempts to forecast markets remain more art than science. We nail some predictions while failing spectacularly at others. Yet we have a training ground for developing these forecasting abilities: the market itself. Speculation, investment strategies, and exchanges form a global infrastructure for predicting the future, almost like a massive multiplayer game where millions daily bet real money on tomorrow.
This global casino also has an educational function. Markets give society an inoculation against greed that's painful but effective. Here financial bubbles are born and die, taking with them all those who never understood a simple truth: in the pursuit of everything, you can lose everything.
It was precisely this problem of chaos and unpredictability in financial markets that Satoshi Nakamoto solved. Before Bitcoin's emergence, the world of finance had only illusory predictability, which like sand castles deceived all those who believed in it. You had only to look away, and the castle would crumble, giving way to a new promising theory.
Satoshi set an audacious goal: create money that would operate with the precision of celestial mechanics. Money independent of politicians' whims, immune to crowd emotions, following iron mathematical logic. And Satoshi knew exactly which variable could be locked into strict mathematical frameworks and fixed forever. This, in turn, would affect everything else, including price.
The genius of Satoshi Nakamoto solved the problem of the century with just one line of code. He embedded Bitcoin's supply limit into the very architecture of the blockchain:
static const CAmount MAX_MONEY = 21000000 * COIN;Such a simple constant, yet what an enormous range of problems it solves. It stripped governments of their money-printing monopoly, freed people from trusting politicians, and even clipped the wings of the war machine, making wars less profitable. One line of code against a century of state control over money.
Satoshi, like many clear-eyed observers, saw what everyone else stubbornly ignores: fiat money is fundamentally flawed and erodes itself slowly but inevitably. Every dollar, euro, or yen gradually loses purchasing power. Sometimes this process slows, creating an illusion of stability. But when crisis strikes, the printing presses run at full capacity, accelerating devaluation by orders of magnitude.
Consider the "modest" 2% annual inflation that almost all central banks target. Over a 35-year career, a person loses half their savings' purchasing power. An entire generation's retirement fund, accumulated throughout their working years, buys only half what it could in their youth. Ironically, this 35-year devaluation cycle is perhaps the most predictable process in modern economics.
But politicians aren't the only problem. The entire structure of classical finance depends on constant money creation. Central banks worldwide follow this principle. At the first sign of economic slowdown, money printing accelerates.
The military-industrial complex gets priority access to newly printed money. Defense contractors wave multi-billion dollar contracts while officials invoke national security. Trillions of fresh dollars flow into contractors' pockets. This money patches every budget hole and policy failure. Education failing? Military spending provides distraction. Healthcare broken? Defense contracts offer political cover. How convenient when there's always an enemy, real or imagined.
There's no escape from this system internally. Politicians, bankers, and financiers all depend on the same mechanism: money printing. They may debate details like whether to print a trillion today or spread it over two years. But stopping the presses entirely? Unthinkable. It would be like asking an addict to quit overnight.
Gold fought this problem for millennia and lost. When states became all-powerful, precious metal became a hostage. One stroke of the pen and gold gets confiscated. Another stroke and it can't be transported across borders. A third and owning it becomes a crime. Thus the gold coin, which for centuries protected against government tyranny, fell into its hands. By destroying the right to inalienable gold ownership, the state nullified all the advantages of holding it.
The final blow to gold was opacity. How much metal actually sits in Fort Knox or London vaults? Nobody knows for certain. This secrecy transformed the gold market into a manipulation playground where financial syndicates and officials pull invisible strings, managing prices at will.
But with Bitcoin, these old tricks are powerless. In the early days of its development, Bitcoin could still be stopped by arresting a handful of enthusiasts and declaring everyone else outlaws. Today, Bitcoin has grown into a global network with millions of participants worldwide. Killing it would require simultaneous coordination among all 193 countries, which is realistic only in theory.
Instead of a global ban, we got a global race to see who will adopt Bitcoin fastest and attract more capital. El Salvador made Bitcoin legal tender and has been accumulating for years. The US launched the largest crypto ETFs, with other countries close behind. This looks less like coordinated prohibition and more like former opponents rushing to lead the movement they once opposed.
No wonder the attempted strangulation of crypto through banking restrictions only accelerated DeFi (decentralized finance) development. But this resilience stems from Bitcoin's core feature: its fixed supply, unchangeable even by its creator.
Technically, any programmer can copy Bitcoin in thirty minutes by downloading the code, changing the magic number from 21 million to whatever, and launching. But this would be just another altcoin, a hollow copy running on one server with no future beyond its creator's imagination.
Behind the original Bitcoin stands an entire ecosystem: millions of miners, thousands of developers, a global community and network of projects. Any attempt to change fundamental parameters would create a fork. There have been thousands, and there may be thousands more. Miners won't redirect expensive ASICs to mine a new coin. Investors won't trade proven digital gold for an untested alternative. Users won't abandon a global payment network for a ghost town inhabited only by its creator.
Bitcoin's fixed, unchangeable, transparent and publicly verifiable supply makes this cryptocurrency immune to manipulation. Bitcoin removed from the financial equation both the unpredictability of human decisions and the exploitation of social contract loopholes.
This transparency makes Bitcoin stronger than tons of gold hidden in secret vaults. With just internet access, anyone can verify the network's current state, coin supply, and any wallet balance. And unlike gold, no government can stop Bitcoin from crossing borders. Memorize your seed phrase, and no checkpoint can touch your wealth.
But Bitcoin surpassed gold not only in transparency and portability. Its main uniqueness lies in a mechanism that makes this cryptocurrency predictably unpredictable. We're not talking about a simple deflationary asset growing linearly in proportion to fiat inflation. This digital currency embraces extreme volatility, and this isn't a bug, it's a feature. Thanks to massive price swings, periods of sharp growth and decline, we got a cyclical system whose behavior can be analyzed and predicted.
Every four years Bitcoin repeats the same scenario: prolonged growth, then sharp decline. The halving period is also four years, and it's logical to assume that halvings drive Bitcoin's cyclicality. The mechanism is simple: each halving cuts new coin issuance in half. Fewer sales from miners shift the balance toward buyers and price growth.
This logic is correct, and forecasts can be built on its basis, but of course this is only part of the picture. Usually, Bitcoin's chart is sliced into four-year segments by halving dates, which are then compared to each other. Such an approach is appealing for its simplicity and conciseness. I myself, being a crypto newcomer, was a fan of halving cycles. Perhaps the ease of understanding played a role, or perhaps my personal fascination with mining. When the metal ASIC S9 box started at full throttle with the roar of a fighter jet, all of Bitcoin began to seem like a story about hardware, hashrate, and heroic miners supporting the network.
But over time came understanding: halving and mining, while being crucial elements of Bitcoin, aren't the only factors in the equation. A whole spectrum of visible and hidden factors influences price cyclicality: from global money supply growth and central bank policies to banal human emotions of fear and greed. With network maturation and growing popularity, halving cycles transformed into something more complex and interesting: Bitcoin's economic cycles.
The main difference is the starting point. Halving cycles follow the blockchain calendar, measuring time by technical events. Economic cycles follow market rhythms. They begin when the last holder capitulates at the absolute bottom. And they don't end after a predetermined number of blocks, but when a new wave of despair drives price back down. Code doesn't dictate the rhythm; human psychology does.
This approach reveals a much clearer picture of market dynamics. Let's return to the chart from the introduction. This is a monthly BTC/USD chart where the past three cycles are marked, as well as the current fourth. The price scale is logarithmic. This allows us to see even small price values that would otherwise be lost when scaling the chart to current values.
Red arrows mark all-time highs (ATH) of each cycle. These levels become resistance zones for future cycles. Green arrows mark each cycle's lowest values, where Bitcoin lands after dramatic declines. Typically, such declines stop near the previous cycle's high, forming a new floor from which the next four-year journey begins. Cycle duration, marked with arrows, falls within 1,430-1,522 days, roughly four years.
At the time of this snapshot, price was consolidating at $67,000, the exact ATH of the previous cycle and consequently the strongest resistance level. Here Bitcoin paused, gathering momentum for the next move. And while these lines were being written, Bitcoin broke into six-digit territory, crossing another historic milestone.
The first cycle became the template for this pattern. Interestingly, the 2011 growth and decline discussed in the first chapter was merely a rehearsal. Price rose from cents to $32, then crashed 92% to $2. This entire episode was just a smaller version of the larger four-year pattern that followed, reaching $1,200 before collapsing to $164.
But why count the first cycle from late 2010 rather than the Genesis Block of January 3, 2009? There are solid reasons. The first two years, Bitcoin existed essentially as a live experiment known only to a small circle of enthusiasts. Code changed frequently, infrastructure didn't exist, price discovery was minimal. Mass adoption was technically impossible. Most importantly, economic cycles need a global minimum after falling from previous highs. In the very beginning, such history simply didn't exist.
Therefore, December 2010 serves as the practical starting point when experimentation ended and real money began. Here the first documented mini-rally concluded: Bitcoin grew from near zero to 50 cents and crashed to 18 cents. Bitcoin's first economic cycle began almost two years after the network launched.
I understand if this creates some confusion. In the first chapter I called the entire period from Bitcoin's birth the first cycle, and now I'm shifting the starting line two years forward. Forgive this narrative trick. I wanted to introduce you to the world of Bitcoin and cryptocurrencies progressively, without overwhelming you with information upfront.
And here's where it gets interesting. Logic suggests that if we abandoned rigid halving dates for chaotic price extremes, cycles should vary in length. Markets are unpredictable, emotions spontaneous, crises random. Yet as if following an internal rhythm, these seemingly random price peaks and bottoms fit into remarkably regular four-year patterns. I don't have a definitive answer why this happens, but I have two compelling hypotheses.
The first connects to global rhythm synchronization. US presidential elections occur every four years, determining not just domestic policy but global financial flows. New administrations can radically alter approaches to regulation, taxation, and monetary policy. These shifts create liquidity cycles and risk appetite changes that particularly impact volatile assets like Bitcoin. Moreover, four-year electoral cycles operate in most developed countries, creating synchronized waves of global economic decisions.
The second hypothesis involves mass psychology and collective market memory. Four years is the sweet spot where most people forget the pain of financial losses and again believe in easy money. Participants who lost in the previous crash either rebuild capital and feel ready for new risks, or exit permanently. Fresh players replace them, unencumbered by painful memories. This becomes especially vivid across two cycles when an entire generation of young investors enters the arena. For them, past crashes are just cautionary tales. They enter with complete confidence in their uniqueness, certain that "this time is different."
But again, these are hypotheses. No one can guarantee four-year cycles are permanent. Perhaps Bitcoin will mature beyond such dramatic swings. Or the global economy will transform so fundamentally that old rhythms cease to function. Therefore, the real insight isn't in blindly following the calendar, but in understanding the internal mechanics of each stage. It's precisely the anatomy of psychological and economic processes in each phase that reveals where we are and what might come next. Let's explore this now.
Each Bitcoin economic cycle progresses through five characteristic phases, all with distinct psychological features. Understanding this anatomy explains not only price movement mechanics, but also why global minimums serve as more reliable cycle starting points than maximums. Minimums form under conditions of maximum capitulation and despair, predictable and stable states. Peaks emerge from euphoria and FOMO1, emotions extremely volatile and unpredictable in intensity.
Let's break down each phase in detail.
Phase 1: Accumulation
Here at the global bottom, the old cycle ends and a new one begins. This phase, combined with the preceding decline, earned the name "crypto winter": a period of dramatic storms followed by frozen indifference, when even the most persistent participants abandon the battlefield. The few who remain sink into deep pessimism about the industry's future. Journalists and analysts compete to write Bitcoin's most creative epitaphs, declaring it definitively dead.
The accumulation phase is quite easy to recognize: price freezes in sideways movement after a new record decline is established. This minimum is born in an avalanche of panic selling and mass capitulations. Price seems to break through ice and briefly goes below, but then surfaces and begins cautiously testing the ice for strength. The paradox is that precisely here, amid the darkest news and forecasts, the market becomes most rational. The emotional crowd has already left.
This explains why minimums serve as ideal cycle markers. They're stable and easily identified. At this time, patient investors and true Bitcoin believers enter the game and begin quietly and unhurriedly accumulating their beloved BTC.
Phase 2: Awakening
After months of stagnation, the market shows signs of life. Recovery proceeds slowly, like emergence from deep hibernation. News becomes less toxic, reports surface about new developments and projects. Major players return to scout the landscape. In collective consciousness, an invisible shift occurs: apathy gradually transforms into cautious optimism.
The exception was the March 2020 collapse, when Bitcoin crashed and quickly returned to previous levels, from where it went higher. But the market was already in recovery phase when this external shock hit. The COVID-19 pandemic created temporary panic. Once investors processed the new reality, price resumed its upward trajectory with renewed vigor.
Phase 3: Acceleration
This phase typically coincides with the halving period or begins shortly after. Growth tempo increases, forming a stable upward trend. Trading volumes expand while news coverage turns increasingly positive. At this stage's peak moment, price breaks through the previous cycle's maximum. This breakthrough immediately captures broader audience attention. New participants flood the industry, attracted by success stories and profit opportunities.
Psychologically, an important transformation occurs: cautious optimism evolves into confidence, then gradually mixes with greed. Market participants increasingly believe in endless growth and race to build positions.
Phase 4: Euphoria
The most intense and dangerous phase of the cycle. Price grows exponentially, bringing new all-time highs every day. In crypto X-twitter, all talk is about eternal growth and lifestyle upgrades with expensive cars and luxury watches. The market floods with newcomers while the air is saturated with uncontrolled FOMO.
This mania always ends identically: the bubble bursts and price plummets. On charts, price rarely lingers at maximum levels. More often it spikes to an extreme, then rapidly cascades downward. This resembles individual hysteria, impossible to predict in intensity or duration. Only luck and providence help traders estimate how long collective euphoria will last and what heights price will reach.
Due to extreme emotional overload and uncertainty, ATH formation zones lack the precision of minimums. Yes, peaks can also serve as measuring points, but the resulting cycle durations vary significantly. Sometimes identifying the exact top proves challenging, as in the third cycle where Bitcoin showed two nearly equal peaks.
Phase 5: Collapse and Capitulation
After establishing a record, price begins retreating. Initially this appears as normal correction. Market participants maintain faith in the trend and eagerly buy every dip. But gradually the decline accelerates. Optimism shifts to anxiety, then panic. Negative news fuels the selling pressure, driving prices below even the most pessimistic forecasts.
Those who recently crowded at the entrance to this express train now push each other trying to jump from the cars. Panic triggers an avalanche of selling, sweeping away all support levels on the path to a bottom unthinkable just yesterday. Each new breakdown adds fuel to the fire of fear, forcing even more participants to dump their positions. This agony ends with total capitulation: the moment when the cycle bottom forms and the next four-year marathon quietly begins in the silence.
Understanding this anatomy is key to successful investing, and not only in Bitcoin. Knowing the market's current phase enables more balanced decisions about entries and exits. But how can this knowledge be applied practically?
Reality check: understanding cycles won't transform you into a profitable day trader, but it will help avoid the euphoria trap of buying at the very peak. It will also help overcome the paralyzing fear at cycle bottoms and start gradually building your position. This strategy shines over the long term and represents the perfect approach for investors ready to wait years for results.
Understanding cycle duration and recognizing each phase's signs, you can anticipate the approaching bottom and maximum opportunity moment. Some believers are ready to sell everything, including house and car, to invest everything in Bitcoin. I don't advocate such extremes, nor do I give financial advice. Everyone is responsible for their own market research and capital. But I understand these Bitcoin believers who see such moments as once-in-a-lifetime opportunities.
A more conservative and calculated approach involves waiting for confirmation that the bottom has actually passed. Yes, this may cost several months of waiting, but provides additional insurance against catching a falling knife and getting second bottom as a free bonus. Of course, such caution has a price and sometimes leads to buying at higher levels, especially when Bitcoin explodes out of the accumulation zone. But don't worry: any gains missed during the initial recovery pale compared to the journey toward future records.
Key signs of bottom confirmation: price holds above minimum values for several months, trading volumes decrease, and although many experts continue forecasting further decline, there's a weakening of panic in the information background and even loss of interest in Bitcoin overall. There are no guarantees and can't be, but patient waiting for these signs significantly increases the probability that the worst is behind us.
Another strategy worth sharing is DCA (Dollar Cost Averaging)2: regular purchases of fixed amounts regardless of current price. This strategy rightfully claims the title of best approach for accumulating not only Bitcoin but any assets. Understanding cycle phases makes DCA especially effective: you activate regular purchases precisely when the cycle approaches its final decline phase or has already passed it.
DCA removes emotions from the investment equation. Forget about catching the perfect bottom: just buy mechanically at $20,000, at $15,000, at $25,000. Yes, you won't invest all capital at the absolute minimum, but you'll build a position at prices most can only dream about. Psychologically this proves much easier than eternal waiting for the perfect entry, which exists only in beginner fantasies. DCA's main advantage is iron discipline: when the crowd panics and proclaims Bitcoin's death, you calmly continue accumulating on schedule. Price falls lower. You buy. It rises. You buy too. Methodical approach instead of emotional swings.
Apply these simple strategies year after year, and in the eyes of those around you, you'll turn into the Warren Buffett of the cryptocurrency world. The recipe is simple to the point of banality: patiently wait out the final stage of the four-year cycle, then methodically launch a pre-planned accumulation system. It's all about discipline and understanding market rhythm.
But the cycle model isn't immutable and continues evolving. Perhaps accumulation phases will compress while decline periods stretch for years. Even the four-year interval itself may transform into something new. But as long as human nature exists with its waves of greed and fear, Bitcoin's cyclicality, like the entire market, will remain with us. And those who learn to read the cycle's rhythm will find their profit.
The living embodiment of this philosophy is Bob Loukas, an investor who turned understanding cycles into art. Bob perfected the four-year cycle model, creating a system where it's enough to make just one or two trades over several years. His track record is impressive: precise entry at the 2018 bottom and repeating success in 2022. All of Bob's trades are documented and confirmed in his rare but valuable videos. I regret only discovering Bob's channel in 2020, and fully grasping the simplicity and effectiveness of his approach even later. However, this led me to deeper Bitcoin study.
And in this I see my personal mission: to share the results of my research and tell the stories of the ideas and people behind the Bitcoin movement. This book is my attempt to show Bitcoin's evolution through the lens of four-year cycles and explain why BTC isn't just an alternative to the dollar, but a fundamentally new type of money capable of changing the world for the better.
Each four-year cycle attracted new waves of participants into the ecosystem. First came hodlers and mining enthusiasts, then professional traders, followed by Wall Street suits, ETFs, and even heads of state. Without this constant influx of new participants, Bitcoin would have remained a tool for a small group of tech enthusiasts and cypherpunks. It was mass adoption that lifted the price from cents to six-figure numbers.
With each cycle came a shift in dominance. More substantial groups replaced the previous most active players, each bringing their own goals and interests that shaped the entire market. Each new cohort didn't just change the balance of power but multiplied the value of the entire system, laying the foundation for the next stage of growth.
The first economic cycle launched this mass attraction process. I deliberately emphasize user growth first, since networks initially grow in size by increasing participants. Only then does the value each user receives from the network increase. This ultimately translates into Bitcoin price growth visible on charts.
Here Metcalfe's Law3 comes into play: a mathematical formula explaining explosive network growth. Robert Metcalfe, creator of Ethernet, derived a simple relationship: network value grows as the square of participants (N²). Imagine: a thousand users create a million potential connections. Add another thousand and value doesn't double but quadruples. Each newcomer doesn't just join but multiplies possibilities for everyone else.
Apply this mathematics to Bitcoin. December 2010: only 3-4 thousand active addresses. End of 2013: already 800 thousand. Growth exceeding 200 times. But Metcalfe's Law operates differently. The quadratic function transforms 200-fold user growth into a 40-60 thousandfold explosion of network value. Check the charts: price soared from cents to $1,200. Mathematics aligned with reality.
Numbers confirmed the theory but created a new puzzle. How did a technical experiment transform into a phenomenon with hundreds of thousands of participants in three years? Why did ordinary people, previously unfamiliar with cryptography, start installing wallet programs and risking real money? Ironically, the breakthrough came from the dark corners of the internet, through a project that would become both notorious and pivotal to Bitcoin's growth.
Silk Road, Ross Ulbricht's darknet marketplace, became an unexpected catalyst for Bitcoin's mass adoption. The platform traded everything, including illegal goods, and Bitcoin was the only accepted payment method. Buyers had to learn Bitcoin basics: setting up wallets, purchasing coins, and sending transactions. No ideology or faith in technology required, just pure pragmatism. They didn't care how blockchain worked as long as payments went through and packages arrived. Yet this wave of pragmatic users gave Bitcoin what enthusiasts couldn't: real demand and practical usage.
Of course, not every Silk Road buyer became a Bitcoin evangelist, but seeds were planted. Even after the FBI shut down the platform in 2013, arresting Ross in a San Francisco public library, momentum continued building. Word spread about this new form of internet money. Ross himself received life imprisonment without parole, certainly an extreme price for his role as Bitcoin's unwitting popularizer. But even this story got an unexpected twist: in January 2025, President Trump personally pardoned Ulbricht. The Bitcoin community exploded with joy, and donations flooded Ross's wallet, including one generous gift of 300 BTC4. So Ross gained freedom, legendary status, and significant Bitcoin wealth. Quite an unexpected finale for someone who simply wanted to create a truly free market.
Bitcoin didn't care about your motivations. An idealist dreaming of financial revolution? Welcome. A Silk Road buyer or profit-seeking speculator? There's room for everyone. Each became part of the network, regardless of intentions. This diverse army scattered across different interests. Some dove into mining on home PCs and DIY GPU farms. Fortunately, before ASICs arrived in 2013, this generated profit without million-dollar investments. Others opened exchanges, while third parties launched services. The ecosystem expanded in all directions simultaneously.
Everyone found their niche: traders mastered crypto exchanges, enthusiasts launched peer-to-peer services, and entrepreneurs integrated Bitcoin as a payment method in their online stores. But the most ambitious went further. They took Bitcoin's open code, tweaked a few parameters, and announced the birth of an "improved Bitcoin." This wave of forks spawned notable names: Litecoin positioned itself as "silver to Bitcoin's gold," Ripple focused on banking partnerships, Dogecoin started as a joke and became crypto's first successful memecoin. Monero pursued privacy and succeeded. Meanwhile, thousands of other coins faded into obscurity, leaving only code repositories as evidence of their existence.
But, where there's money, there are scammers. Growing cryptocurrency popularity attracted fraudsters like a beacon. However, blaming Bitcoin for this is like accusing the internet of enabling phishing. New technologies always attract two types: those who want to build the future, and those who want to profit from others' naivety about that future.
The first cycle's biggest scam was Bitcoin Savings and Trust, a pyramid scheme that absorbed massive amounts of BTC. Trendon Shavers, operating under the nickname pirateat40, lured investors with promises of 7% returns weekly. Yes, seven percent in seven days, a glaring red flag, but greed blinded investors. To cover up the Ponzi scheme, Shavers fabricated stories about arbitrage and broker lending. By 2012, the pyramid held half a million bitcoins, roughly 5% of total circulation at that time. The predictable conclusion came mid-year: first an announcement of closure, then bankruptcy.
263,024 BTC vanished. At contemporary exchange rates, this was only $4.5 million. But this represented almost 3% of all existing bitcoins. Mt. Gox would later exceed this in absolute numbers, but as a percentage of supply, such losses were catastrophic. The real tragedy for victims unfolded over time. With each price increase, their losses multiplied. Imagine: losing "only" a few thousand in 2012, then realizing a decade later those were tens of millions.
BST was just one example among many. The first cycle served as a template for all future crypto dramas: hacks, scams, exchange collapses, but at smaller scales. Each scandal fueled volatility, especially when the cycle headed toward its conclusion. Yet remarkably, no matter how many projects failed or funds were stolen, the cycle maintained its schedule. Four years from bottom to bottom, through euphoria to despair. Technologies evolved, scammers refined their methods, but the pattern remained unchanged.
Then somehow Bitcoin climbed from the depths, shook off the dust, and a new act of the four-year drama began. Fresh faces, ideas, and capital poured into the ecosystem. Price slowly but steadily broke through the previous cycle's maximum, a psychological barrier beyond which uncharted territory opened. And there, in this new frontier, Bitcoin created new history. Until the inevitable finale threw it back down. But even this new bottom landed higher than previous peaks. Each fall became a springboard for the next leap.
Each Bitcoin cycle attracted different participants. The first brought early enthusiasts and Silk Road users. The second drew traders and initial funds. The third attracted corporations and even countries. The fourth cycle became a time of worldwide adoption. Participants changed, scales grew, technologies evolved. But the structure remained constant: accumulation at the bottom, slow awakening, accelerating growth, peak madness, and inevitable collapse. Time and again, the chaos of human emotions fit into the same four-year pattern.
And if you're reading this book at a cycle turning point, whether at the depths of despair or heights of euphoria, consider it fortunate timing. You now understand Bitcoin's four-year rhythm, a pattern many traders never grasp. Of course, no guarantees exist. Run from anyone promising otherwise. But history persistently repeats: the same emotions, phases, and sequence. Only scenery and actors change while the play remains unchanged. Understanding this script is already half the battle.
Satoshi's genius didn't just create money; he engineered the most predictable unpredictability in financial history. Four years of greed and fear, wrapped in elegant mathematical precision. For those who understand this game, success comes down to patience and timing. The first cycle laid the foundation, but the real revolution began when smart contracts, DeFi, and entire digital economies entered the arena. That story comes next.
1 FOMO: Fear Of Missing Out
2 DCA: Dollar-Cost Averaging. Read more
3 Metcalfe's Law: network value grows proportionally to the square of users. Read more
4 Ross Ulbricht donations address