Bitcoin Supercycle: How the Crypto Calendar Can Make You Rich

This book is written for educational and informational purposes. It is not intended as financial advice. Everyone should do their own homework and, if desired, consult financial professionals to help them determine what level of risk is appropriate for their situation.

Copyright © 2024 by Michael Terpin

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Library of Congress Cataloging-in-Publication Data is available on file.

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Cover photo created by Form-u.la with humans and robots using Midjourney and Adobe

Author photo courtesy of Greg Doherty Photography

Print ISBN: 978-1-5107-8215-0

Ebook ISBN: 978-1-5107-8217-4

Printed in the United States of America

I dedicate this, my first published work of nonfiction, to the memory of my father, Walter Terpin (1923–2020), who instilled in me the work ethic and moral fabric to succeed in life, and my mother Jeanne Elizabeth Jackson Terpin (1928–1979), who, along with her sister, my beloved aunt Helen Chaffee (1929–2013) and maternal grandmother, Macie VanOrman Jackson (1898–1992) fostered in me and my brothers Mark and Christopher Terpin (both very much alive and well and living in Buffalo, New York) a passion for creativity, the arts, and, in my case, a lifelong passion for writing.

I also dedicate this book to the two most important women in the storyline of my own adult life:

My former wife, Maxine Hopkinson, who encouraged me to pick up a suitcase and travel the world in pursuit of bitcoin knowledge and evangelism starting in 2013, when she noticed the industry wanted to hear from me and was offering to fly me around the world. Go where you are loved, she said.

And last, but certainly not least, this book is dedicated to my current partner and love, the beautiful and brilliant Joyce Chow, a tireless, devoted soulmate and fellow crypto degen, who has been a constant source of inspiration, boundless energy, and personal fulfillment.

Contents

Introduction

Book One: Bitcoin Is Internet-Based Hard Money

Chapter One: What Bitcoin Is, Why It Is Important, and How to Use It

Chapter Two: The Lessons of Hard Money

Chapter Three: The Science and Philosophy Behind Bitcoin

Chapter Four: The Bitcoin White Paper

Book Two: Understanding the Bitcoin Cycles

Chapter Five: The Genesis Block and First Bitcoin Cycle

Chapter Six: The 100x Cycle of 2012–2016

Chapter Seven: Bitcoin Forks and ICO Mania

Chapter Eight: Money Printing, Macroeconomics, and Memes

Chapter Nine: Bitcoin Becomes Scarcer than Gold (2024–2028)

Book Three: The Four Seasons of Bitcoin

Chapter Ten: Bitcoin Spring

Chapter Eleven: Bitcoin Summer

Chapter Twelve: Bitcoin Fall

Chapter Thirteen: Bitcoin Winter

Book Four: Mastering the Bitcoin Cycles

Chapter Fourteen: The Bitcoin Supercycle

Chapter Fifteen: Mastering the Cycles

Chapter Sixteen: The World Computer

Chapter Seventeen: Altcoin Season and the Memecoin Casino

Chapter Eighteen: DeFi for Income

Chapter Nineteen: Alternative Strategies

Book Five: Million-Dollar Bitcoin

Chapter Twenty: The African Spring

Chapter Twenty-One: The Path to Million-Dollar Bitcoin

Endnotes

Acknowledgments

About the Author

Index

Introduction

April 20, 2024, 4:09 a.m. GST (00:09 UTC)

It’s a beautiful late night in Dubai, with sultry trade winds blowing into the manmade harbor. Just three days earlier, the region was pummeled by an unprecedented storm of near-bibl​ical proportions, dumping a record ten inches of rapidly falling rain—more than two years’ worth in one day—onto a bustling boomtown of three million people that essentially has no municipal drainage system to cope with such a storm. Complicating matters further, nearly 50,000 people came to Dubai this week, the newest mecca for the cryptocurrency world, to attend four hundred events and to observe (through a stroke of genius planning or extraordinary good luck) the quadrennial event that in many ways defines and drives an industry and an economy that has grown from nothing to more than $2.5 trillion dollars—the bitcoin halving.

I stayed up late so I could once again watch the blocks tick by online. Nine more blocks, eight more blocks, seven more blocks … announced the various sites and watch parties occurring around the world. I was on the deck of former Bitcoin Foundation chairman Brock Pierce’s DNA Fund yacht, which was still lively with afterparties as 4 a.m. approached. I was counting down the minutes with a small group, including prolific crypto startup investor Brian MacMahon of Expert Dojo, who flew in from Los Angeles for the occasion. I engaged in online chatter from around the world, as the last blocks of the Fourth Bitcoin Cycle were created and sealed. Finally, the halving was here, with Happy Halving greetings online and on the yacht. I was hoping someone would have shot off fireworks above the harbor full of bitcoiners, but all that I heard was the light breeze and chatter of people on the yacht’s upper decks as they finally headed back to their hotels.

The Bitcoin halving is simple and elegant, yet widely misunderstood by those who are not intimately involved in the industry. Does this mean I now have twice as much bitcoin, like a stock split? asked one of my attorneys. Thankfully, he was not a crypto attorney but one who has dealt with enough issues in this realm that his question surprised me. No, I explained. The halving simply means that the supply of new bitcoin is issued at half the rate of the prior four-year period. This is more akin to OPEC cutting oil production, which generally pushes the price of oil upward.

The Bitcoin halving is quite simply the algorithmic mechanism that pseudonymous Bitcoin creator Satoshi Nakamoto put into place to reward early active participants in building the network with a larger share of the rewards than later participants. Think Amway or Mary Kay. Here, early bitcoin miners earn newly minted bitcoin directly from the chain through what Satoshi referred to in the Bitcoin white paper as mining, a term used to describe the process of running software that independently verifies transactions between any two entities on earth without the need for governments, lawyers, bankers, or any type of third-party counterparty. This verification process, referred to as consensus, employs voluntary third parties with no stake in the transaction to independently confirm that a certain amount of bitcoin leaves one digital wallet and is accepted by another without any attempts to spend it twice. These miners are rewarded for turning on their computers and running this program all day and all night (hence, proof-of-work) with a small fee for each completed transaction. More importantly, they receive fresh bitcoin from the bitcoin exchange coinbase (not to be confused with the American exchange, Coinbase). The Bitcoin coinbase is the algorithmic source that generates new bitcoin on a fixed schedule of 21 million bitcoin over 132 years for solving a cryptographic equation whose difficulty assures that the power of computers on the network is sufficiently strong to defeat any attack that would dismantle the permanent record of these transactions. Satoshi dubbed this linked chain of permanent financial records a blockchain. It is literally a chain of blocks, each containing a ledger of all transactions confirmed in the prior ten-minute period. We now have a permanent record, viewable by anyone on earth with access to the internet, of all transactions dating back to the Genesis Block (the initial building block), which kicked off the existence of Bitcoin on January 3, 2009. That initial block carried the inscription The Times 03/Jan/2009 Chancellor on brink of second bailout for banks as both a time stamp and political commentary. More on this in my chapter on the Bitcoin white paper.

My purpose in writing this book is multifold:

1) I have been looking for narratives to explain the fundamental value and continual growth of bitcoin since it was $66 in 2013. How often do you find an asset class comprising both value and growth? Since 2015, when the effects of the first halving cycle had run its course and the second halving cycle was being established, I began using the phrase Four Seasons of Bitcoin to describe the four discrete components of every four-year cycle:

a. Spring, when the seed of the new Bitcoin halving occurs;

b. Summer, when the seed of spring blossoms into parabolic growth and a new all-time high;

c. Fall, when the new cycle’s bubble pops and unsteady, weak hands race for the exits; and

d. Winter, when pessimism is at its most extreme, yet the buying opportunity is always the greatest.

These cycles have repeated like clockwork for fifteen years, and I believe they have at least three more cycles until we have reached a more mature market where the majority of the world’s population holds at least some bitcoin, directly or indirectly, and the peaks and troughs of each cycle’s price are more in line with far more established asset classes, like gold and bonds.

2) I desired a platform to address a more mainstream audience about the short- and long-term financial opportunities presented by bitcoin and cryptocurrency, from the perspective of an industry insider instead of a nonpartisan journalist. Most traditionally published books on bitcoin to date have been written by journalists. It’s one thing to write about a war from an outside perspective, interviewing hundreds of sources; it’s another having actually lived through the firefights in the foxhole.

3) I’m seeking to initiate and/or support new narratives within the financial and corporate communities that require an understanding of the past, present, and future of bitcoin (the mothership) and of the increasing array of interesting, often disruptive, cryptocurrency projects that form a completely different narrative and opportunity than the Bitcoin protocol itself. I spend one chapter discussing the differing perspectives of the Bitcoin maximalist community and the broader multichain perspective that includes all other cryptocurrencies. Bitcoin maximalists consider bitcoin to be the one true God, and all other attempts are poor copies or frauds. Multicoiners believe bitcoin is great for an immutable store of value, but newer chains with more advanced technology are better at solving other challenges, including smart contracts, decentralized finance, and blockchain gaming. Newer chains are also faster and have lower fees but are less decentralized and less secure.

Bitcoin Supercycle is divided into twenty-one chapters (one for each of the 21 million bitcoins in existence), with the chapters organized into five sections (which I refer to as books).

"Book One: Bitcoin Is Internet-Based Hard Money" begins with a history of the prior attempts to create digital money, dating back to the Cypherpunks (for a truly comprehensive view of the history of money and why Bitcoin is the most complex form of money ever invented, I highly recommend reading The Bitcoin Standard, by Dr. Saifedean Ammous, which has sold more than a million copies since it first hit the bookshelves in 2018).i I limit my narrative to the past fifty years instead of the five thousand years or more that humankind has sought to quantify value beyond simple barter. However, I delve briefly into the concept of hard money and its evolution, setting up the current battle between bitcoin and the world’s central banks, which are no longer backed by gold or any other physical asset, and racing one another to see who can print enough money to stay in power. An increasingly digital and educated population is quickly discovering that money printing without economic development is a quick path to the impoverishment of nations. Finally, I cue up the road map provided by the Bitcoin white paper, which was issued on October 31, 2008, at the depths of the financial crisis now known as the Great Recession. Steeped in Austrian economics and libertarian ethics, the concepts in the white paper served as the basis for the growth of the entire multitrillion-dollar bitcoin and cryptocurrency asset class in less than fifteen years.

"Book Two: Understanding the Bitcoin Cycles" follows each of the five cycles of bitcoin’s history to date. There will be thirty-three four-year cycles until the final fraction of a bitcoin will be issued in 2140. I spend an entire chapter footnoting Satoshi’s nine-page white paper, Bitcoin: A Peer-to-Peer Electronic Cash System, as it is critical to understanding how Bitcoin works. From there, I spend one chapter for each four-year cycle, beginning with the First Cycle (2009–2012) prior to the first halving, which provided the highest gains of any asset class in history before reaching a fraction of 1 percent of today’s valuation. The Second Cycle (2012–2016) is when Bitcoin grew from $12 to $1,200 and became alternately famous (when it reached $1,000, which was more than 1,000,000 times its first recorded price) and infamous (the Silk Road illicit drug markets and the implosion of Bitcoin’s first centralized exchange, Mt. Gox). Cycle Three (2016–2020) saw the rapid rise of Ethereum as a contender to Bitcoin’s dominance as the Initial Coin Offering (ICO) frenzy disrupted the way startups raised money by bypassing venture capitalists and angels altogether and selling anonymously to the crypto public at large (at least until regulators clamped down). That important cycle also saw the creation of Bitcoin Cash and Bitcoin SV, which were contentious hard forks of Bitcoin, threatening to divide the community in a competition for the true Bitcoin (which the original Bitcoin won). Cycle Four (2020–2024) followed the third halving, and it was best known for the creation of three new narratives:

1) decentralized finance (DeFi), which provided yield and lending to cryptocurrency;

2) non-fungible tokens (NFTs), which allowed for each unit of cryptocurrency to be marked up, either in a comment field or smart contract, to create unique digital assets; this category exploded in popularity with meme-related collectibles like Bored Apes and Crypto Punks, then faded as quickly as it had risen; and

3) the metaverse, a virtual world scenario incorporating tokenized avatars, virtual reality (VR), and augmented reality (AR).

Finally, I address the new cycle (2024–2028) and why I believe it will bring on a supercycle, both in terms of faster price movements but also in global usage. The term Supercycle first came into usage during the Great Depression of the 1930s, following the publication of a series of papers and books by Ralph Nelson Elliott, later known collectively as the Elliott Wave theory, in which most financial cycles consist of five waves (more on this in Chapter 15), but a broader Supercycle exists lasting decades. Since then, the term Supercycle has been used to describe various rapid growth phenomena, including new technology markets, which tend to grow from 8 to 80 percent in ten to twelve years. It has also been used intermittently to describe broader financial and technological epochs, such as the Industrial Age, the Computer Age, and the Internet Age. Many believe we are now at the dawn of another epoch, which is defined by the rapid growth of artificial intelligence (AI) and digital assets.

The term bitcoin super-cycle was first used (from best I can tell) in January 2019 by crypto influencer Alex Saunders in a video about the Bitcoin and Litecoin Super-Cycle, where he predicted rapid growth in the 2020–2024 halving cycles. Bitcoin educator and influencer Dan Held wrote a post in 2020, followed by interviews and podcasts in 2020–2021, where he posited that the emergence of COVID-19 and increased money printing by the United States would bring on a Bitcoin supercycle within that cycle that could lift the price per bitcoin as high as $800,000. As it turns out, both predictions were premature, and of course, my theories are simply that: my own theories, although I spend a full chapter detailing why I believe the 2024–2028 halving cycle is where a true Supercycle finally kicks off.

"Book Three: The Four Seasons of Bitcoin"

At the core of this book is a detailed explanation of how the Four Seasons of Bitcoin work in practice and how following the Crypto Calendar has provided dramatically better investment returns than buy-and-hold strategies alone or even dollar-cost averaging (DCA).

Here’s a preview:

Bitcoin Spring begins the day of the halving. It’s when the seed of an entire new cycle is planted. On this day, most bitcoin miners become temporarily unprofitable, as they typically operate at 20 percent profit margins (some are much higher, some are less; this is largely dependent upon the price of electricity per kilowatt and the hashing power of the bitcoin miners). At the moment of the halving, the bitcoin reward per block gets cut in half. On November 28, 2012, it went from 50 bitcoin per block to 25; three cycles later, on April 20, 2024, it went from 6.25 bitcoin to a mere 3.125 BTC per block. In the early days of Bitcoin, prior to the first halving, the majority of mining was done by individuals (known as solo mining), running the original mining software that came with each Bitcoin QT wallet downloaded from the bitcoin.org website. About midway through the first cycle, GPU mining took off (popularized by Laszlo Hanyecz, who famously spent 10,000 of his bitcoin to buy a pizza), increasing the difficulty levels to the point that CPU mining became ineffective. By early 2013, field programmable gate array (FPGA) chips were built to do nothing but mine bitcoin, and they were far more powerful than GPUs. This increased the difficulty to the point that home mining was no longer an option (at least for bitcoin) by the end of that cycle. Solo mining was replaced by industrial bitcoin mining farms, each competing for the fractions of a bitcoin that would be prorated by mining pools. Each new halving makes the majority of miners unprofitable until the difficulty levels adjust and/or new mining equipment arrives. Helping the profitability in the current cycle is the advent of Bitcoin Ordinals and Runes, NFT-like products built on Bitcoin that command higher fees than ordinary bitcoin transactions.

Bitcoin Summer takes place the day the former all-time high (ATH) of the prior cycle is exceeded. For the first halving (2012), it took only four months to break the first cycle’s high-water mark of $30. After the second halving (2016), it took six months to exceed the existing ATH of $1,236. For the third halving (2020), the wait extended to seven months to surpass the 2017 high of $19,188. What has been unique to the 2024 cycle is that the all-time high price from 2021 was breached one month prior to the halving. This has never happened before, and it is a potential signal of a supercycle ahead.ii There are also pundits who claim it simply means a quicker cycle, as most cycles have reached new all-time highs within nine to eleven months of the prior all-time high being achieved (nine months in 2013, eleven months in 2017, and ten months in 2020–2021). If this dynamic played out again, the ultimate ATH for the 2024–2028 cycle would come between December 2024 and February 2025. This dynamic is counter to the other repeating trend in all-time highs: they have so far always occurred in the fourth quarter of the year after the halving. I have a different perspective, that the March 2024 ATH belongs to last cycle, meaning this Bitcoin Summer has not yet occurred.

Bitcoin Fall is quite simply the season when prices fall. Prices in the bull market of Bitcoin Summer tend to overheat as a new class of retail investors are brought in with quick riches in mind, and they keep doubling down on their profits as though this were an endless summer. Bitcoin Fall begins the day after the all-time high, when buying demand is beginning to wane and experienced whales take some profits off the table to reinvest at the start of Bitcoin Winter. It surprises many traditional investors when I point out that the price of bitcoin to date has been at least as predictable as the real estate and stock market cycles, with the third year of each cycle thus far (2014, 2018, 2022) being the only years one lost money, with the other twelve years being solidly in the black to the tune of double, triple, even quadruple digits of gains. This is not a coincidence; the next red year will likely be 2026, following a Bitcoin Summer high in late 2025.

Bitcoin Winter begins the day of capitulation, which is often difficult to recognize until it’s in the rearview mirror. Capitulation is not simply a massive drop in price, as there have been 30 and 40 percent pullbacks even in a bull market. Capitulation is where there are literally no sellers left, as all weak hands have folded their cards and gone home. In the most recent 2022 winter, many thought the bottom was reached when the price dropped below $30,000 after Terra Luna imploded or when it fell below $20,000 when Celsius began its descent into bankruptcy. Indeed, it was the scandalous implosion of FTX, at the time the world’s second-largest crypto exchange, which sent the price of bitcoin down to $15,700, with hungry bears projecting it had much further to fall.iii Yet, when the Genesis crypto lending division of CoinDesk and Grayscale parent company DCG declared bankruptcy a few weeks later, there was nary a drop in bitcoin price, specifically because there were no sellers left—just hodlers (Bitcoin slang for long-term holders from an early meme). This was the buying opportunity of a lifetime, just as the days after the contentious fork of Bitcoin Cash (itself a contentious fork of Bitcoin) into Bitcoin SV marked the bottom of the 2018–2019 Winter, and the implosion of early bitcoin exchange Mt. Gox marked the bottom of the 2014–2015 Winter. Buyers of bitcoin at each market bottom were handsomely rewarded for their unshakable belief.

"Book Four: Mastering the Bitcoin Cycles"

In this section, I break out various strategies for maximizing gain during each cycle, as well as what a supercycle means for these strategies. Areas I cover include:

1) Maximizing profit while minimizing risk. Here, I lay out my personal strategy for cycle trading. Unlike day trading or algorithmic trading, which have mixed results compared with cycle trading and take up exponentially more time and resources, the basis of cycle trading of bitcoin and other crypto markets is fairly simple. My thesis is that each cycle has a relatively predictable top and bottom. The goal is to load up on new bitcoin at the market bottoms (as well as promising altcoins if that’s within your risk profile and philosophy) and sell them at the market tops. While one can never (or at least rarely) pick the market tops to the day, the season of the tops and bottoms have been very predictable within a ninety-day window for each cycle thus far. Whether one deployed this strategy for bitcoin alone