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in Episode 9 we delve into
the enduring nature of Bitcoin's four year cycle
even amidst its growing mainstream adoption
we'll explore how bitcoins
having events occurring approximately every four years
and reducing mining rewards by half
create supply
constraints that significantly influence its price
dynamics despite the surge in institutional investments
and the approval of Bitcoin etfs
these fundamental supply
demand mechanics continue to play a pivotal role
in Bitcoin's market behavior
join us as we analyze the interplay between bitcoins
intrinsic economic principles
and external market factors
shedding light on why its cyclical patterns persist
welcome to the deep dive today
uh today
we're tackling a question
I think a lot of our listeners are wrestling with
it's this whole thing with Bitcoin
why does it seem to have this uh
this unshakeable four year price cycle
you know you think
with all this talk about Bitcoin going mainstream
things would be more stable by now
but it's like this heartbeat that just keeps on ticking
yeah it's a fascinating puzzle for sure
it really is so
we're gonna dig into this article called
why Bitcoin will maintain its four year cycle
despite mainstream adoption
see if we can crack the code together
sounds good it really is fascinating
like you have this surge in mainstream adoption right
things like Bitcoin ETS
those are making it easier than ever
for just the average person to uh
to get involved right
but on the other hand
you have this underlying technology
yeah and it's got its own set of rules
and those rules while they seem to be
kind of dictating how the market behaves
yeah it's like
this underlying heartbeat that I was talking about
just keeps on ticking
no matter what's happening on the surface
so at the heart of it all is this thing called having
can you break that down for us
absolutely so imagine bitcoin as like a story
a constantly evolving story
every four years there's a major plot twist okay
and that twist is the having
basically the reward for mining new Bitcoin
it gets cut cut in half
hmm and this isn't just some random event
this is programmed right into the code of Bitcoin
it's a fundamental rule it can't be changed
so it's like a built in scarcity mechanism yeah
like less Bitcoin is coming into existence
hmm but demand keeps growing
especially when the price starts going up
so what happens there what's the net effect
well think of it this way
if the reward for mining Bitcoin drops suddenly
then the miners have to sell their bitcoin
at a higher price just to break even
oh I see
their operating costs essentially double overnight
so they have to adjust their strategy
if they wanna stay profitable
makes total sense just basic supplying demand
but playing out in a very unique way
now let's talk about those ETS again
we saw the first ones approved in 2024
it was like opening the floodgates
for this whole new wave of investors right
and a lot of people thought this was it
this was the thing that would finally break the cycle
yeah a lot of folks thought that
and the initial impact was undeniable
I mean we saw a price jump early in the year
it was fueled by all that excitement around etfs right
but then something interesting happened
the price settled back into a pattern
that looked a lot like previous cycles
wow so it was like this momentary blip
and then right back to the same pattern
so does that mean these big
institutional investors
aren't really calling the shots
that's a great question I mean
everyone assumes they bring more stability right
they're not as prone to those knee jerk reactions
exactly like
someone checking the price on their phone
every five minutes exactly
but it's important to remember that even with etfs
a lot of Bitcoin is still held by uh
by individuals like just regular people really
yeah a 2024 survey
actually found that 55% of Bitcoin holders in the US
are individuals not institutions
wow
so even with all this talk of Wall Street taking over
it's still mostly driven by individual investors
yeah pretty much
so people like you and me
exactly and that's key to understanding why this four
year cycle persists because individuals well
they're more influenced by new cycles
you know social media hype
fear of missing out all that makes sense
they're quicker to buy or sell based on sentiment
yeah and that can create those big
swings that we see in the price
so the psychology of the individual investor
is almost as important
as the technical aspects of Bitcoin itself
I think you're absolutely right
in fact you could even argue that
those psychological factors are
kind of amplified by having
okay now I'm intrigued
tell me more so think about it
when having happens it creates the sense of scarcity
this
feeling that Bitcoin is becoming even more valuable
and this this naturally triggers FOMO
that fear of mischout especially among those who
you know
don't really have a deep understanding of the long term
implications oh
so it's like a self evolving prophecy almost
yeah the having creates this narrative of scarcity
which drives up demand
which pushes the price even higher
exactly and then on the flip side
when the price starts to drop
you have the opposite effect
panic selling people see their investment losing value
and they just wanna get out
which drives the price down even further
so it's this constant push and pull between FOMO
and panic all happening against the backdrop of having
uh huh which just keeps repeating every four years
exactly like this
built in volatility that's almost impossible to escape
even with more institutional money coming in
so for our listener
who's maybe just
starting to dip their toes into the world of Bitcoin
was the key takeaway here
what do they need to understand about these cycles
well first and foremost
they need to understand that
volatility is inherent to Bitcoin
it's baked into the code don't expect a smooth ride
even with etfs in the picture
so those dramatic upswings and downswings
those are probably gonna continue
even as Bitcoin becomes more widely adopted
yes most likely
that's why it's crucial to have a long term perspective
you can't just look at short term price fluctuations
and make emotional decisions based on
you know FOMO or panic
you need to understand the underlying forces
driving those fluctuations
and those forces
are deeply connected to human psychology
so it's like
you need to be a student of both the technology
and the human behavior that surrounds it
which brings us to another fascinating
layer of this whole cycle discussion
the impact of broader economic trends
because it's not just about
what's happening within the Bitcoin ecosystem right
it's not there are these larger forces at play
that can influence how bitcoin behaves
absolutely and in fact
when we start looking at things like monetary policy
we see some really interesting correlations with
Bitcoin's cycles
yeah it's fascinating
bitcoin often reacts to what central banks are doing
with their monetary policy
things like interest rates and
and quantitative easing
you mean those big levers they pull
yeah that can make the entire economies speed up
or slow down I have to admit
those things can feel pretty abstract most people
so how do they actually affect bitcoin
okay so think of it this way
when central banks are pumping money into the economy
that's quantitative easing or Q E
it's like
they're creating this rising tie that lifts all boats
including bitcoin
bitcoin is often seen as a hedge against inflation
a way to protect your purchasing power
when the value of traditional currencies is going down
so in those like easy money periods
bitcoin tends to thrive
but what happens when the central banks switch gears
and start tightening things up
ah that's where it gets interesting
when we move into a period of quantitative tightening
or QT
it's like someone's hitting the brakes on the economy
okay investors get more risk ofverse
they pull back from those
from those speculative investments
and bitcoin often takes a hit
so you're saying these macroeconomic trends
they can actually amplify
or dampen the effects of having
so it's not just about the built in scarcity of Bitcoin
it's also about the overall economic context
exactly it's like these two forces are intertwined
creating this
this complex dance that drives Bitcoin's price cycles
okay and that's why
it's so important for investors to understand
both the technical aspects of Bitcoin
and the macroeconomic environment okay
this is started to paint a clearer picture for me
so we have
having this recurring event that creates scarcity
and that triggers those predictable
psychological responses and then
we have these broader economic trends
that can act like a tailwind
or a headwind
depending on what the central banks are doing
yes but there's another piece of this puzzle
we haven't really touched on yet
the different types of bitcoin holders
and how their actions influence the market right
because
it's not just a simple dichotomy of institutions
versus individuals within those categories
you have a spectrum of investors
with different time horizons
and different strategies
so can you elaborate on that a bit sure
you have those short term holders
they're often driven by new cycles
social media hype that FOMO we talked about earlier
they're buying and selling
based on short term price movements right
trying to ride the waves make a quick profit
oh so
they're the ones who are most susceptible
to those emotional swings
that fear and greed
the things that can amplify the cycle's volatility
exactly and then you have long term holders
these are the folks
who believe in Bitcoin's long term potential
they're less phased by those
by those short term fluctuations right
they might even see those dips as buying opportunities
a chance to accumulate more bitcoin at a lower price
so their actions would actually
have a stabilizing effect on the market
to some extent yes
they're less likely to panic sell during a downturn
and their study
accumulation can help provide a floor for the price
but it's important to remember
that even long term holders
aren't immune to market psychology
that's a good point
even if you believe in the technology
it's hard not to be influenced by those price swings
right especially
when you see your investment going up or down by
you know significant amounts
absolutely and that's why it's crucial to have a clear
understanding of your own investment goals
and risk tolerance you know
are you in it for the long haul
are you comfortable with volatility
these are questions you need to ask yourself
before jumping into the world of Bitcoin
it sounds like knowledge is truly power in this market
even more so than in traditional financial markets
I would definitely agree because with Bitcoin
you're not just investing in a company or a stock
you're investing in a technology
a protocol an idea
right and to truly understand that investment well
you need to go beyond the price charts
and really delve into the underlying mechanics
the psychology of the market
and the broader economic forces at play
so for our listener
who's trying to make sense of all this
what are some key things
they should be paying attention to
what are the signals amidst all the noise
well I think
the most important thing is to focus on
the fundamentals of Bitcoin
the things that genuinely impact its value
not just the hype or the speculation
but the actual real world usage and growth
like what specifically things like adoption rates
how many merchants are accepting Bitcoin as payment
how is that growing overtime
network security is crucial
how secure is the blockchain against attacks
has it proven to be resilient
and then there's development activity
how many developers
are building on the Bitcoin blockchain
what kind of innovation is happening
so it's about looking beyond the price
and really understanding whether
the technology is actually delivering on its promises
exactly and then there's the macroeconomic layer
we talked about earlier things like interest rates
inflation quantitative easing versus tightening
these are all factors that can influence
bitcoin's price regardless of its underlying
technological advancements
so we've covered the technical role the psychological
the microeconomic
is there anything else investors need to be aware of
when navigating these cycles
it feels like we're looking at this
a multi layered puzzle with Bitcoin at the center
and all these different forces pulling at it
yeah
and there's one more layer I think we should touch on
it's the the broader societal trends
these can really influence how bitcoin is
perceived and valued okay
now you got me really curious
what kind of trends are we talking about here
we'll think about things like technological innovation
geopolitical shifts even changing demographics
for example as younger generations enter the market
you know
the ones who are more comfortable with digital assets
that could create a whole new wave of adoption
and investment it's like Bitcoin is this mirror
reflecting all the ways our world is changing
the more uncertainty there is
in the traditional financial system
the more appealing something like Bitcoin becomes
exactly or let's say there's a major geopolitical event
something that shakes
people's confidence in traditional currencies
well Bitcoin could be seen as a safe haven
because of its decentralized nature
this is so much more nuanced than just
you know looking at price charts
and trying to guess where the market's going
it feels like
understanding bitcoin requires you to understand
the world itself I think that's a great way to put it
bitcoin exists within this complex
web of interconnected systems
and trends the more you understand those connections
the better
equipped you'll be to make informed decisions
okay so let's recap everything we've Learned today
we started by exploring the
having this fundamental event that creates scarcity
and kind of sets the stage for those four year cycles
right then we talked about the psychological factors
how those cycles trigger feelings of FOMO and panic
especially among those individual investors
exactly
and then we talked about how macro economic trends
things like central bank policies
can really speed up or slow down the price of Bitcoin
right like a tailwind or a headwind
yeah exactly
we also touched on
the different types of bitcoin holders
short term versus long term
and how their actions can either add to
or reduce the market volatility
right and how those different
groups respond to those psychological factors
yeah for sure
and finally we explored those larger societal trends
things like technological innovation
geopolitical shifts changing demographics
the things that can really shape
how Bitcoin is perceived and valued right
it's important to remember that
all of these factors are interconnected
they don't operate in isolation
they all influence each other
and that creates a really complex and dynamic system
that can be really hard to predict
but even though we can't predict the future
understanding these forces can help investors
makes more informed decisions
manage risk more effectively
and hopefully avoid some of those emotional pitfalls
that can lead to bad outcomes
absolutely knowledge is power
especially in the world of Bitcoin
which can feel really opaque
and intimidating to newcomers
so if our listener wants to keep learning about
all of this where would you suggest they go
well the article we discussed today
why Bitcoin will maintain its four year cycle
despite mainstream adoption
that's a great starting point
it's written by chaos of money
and they actually have a great podcast too
they delve into all of these topics in even more depth
I second that recommendation
chaos of money is a must listen
for anyone
who wants to understand the future of finance
not just Bitcoin but the whole landscape
and remember the key is to stay curious
keep learning and never stop questioning
the world of Bitcoin is constantly evolving
so the more you understand
the better you'll be able to navigate the challenges
and the opportunities that lie ahead
thanks for joining us for this deep dive
into
the fascinating world of Bitcoin's four year cycle
we hope this episode is
giving you a better understanding of
all the forces at play and empowered
you to make more informed decisions about Bitcoin
until next time keep those brains engaged and remember
knowledge is power