Is it safe to invest my money in Bitcoin? Yes — as long as the 4-year cycle continues
(Edited and updated 9th December 2023) Many people are still on the fence about buying Bitcoin or are hesitating about buying more. If this is you, let’s try to clarify your thoughts by looking at a simple model from a financial expert, allowing you to draw your own conclusions.
The “Stock to Flow” method
This is the “Stock to flow” chart from PlanB. Plan B is a former TradFi numbers person (a “quant”). TradFi uses the Stock-to-Flow method to predict the future price of an asset that has a known “issuance” — e.g. gold, which has an issuance — newly mined gold — of about 2% per year.
Bitcoin’s issuance is also known — currently, it’s also about 2% — so PlanB thought it was useful to use the Stock to Flow method to predict its future price. Zooming out on this chart —focus on a 4-year timespan — his results are impressive. Basically, it’s saying: “After the Bitcoin “halving”, the price always shoots up” (so far…).
Up-to-date chart and video, December 2023 on YouTube: Plan B Bitcoin Prediction: $532,000
The Bitcoin “halving”
Bitcoin’s issuance halves every four years — its algorithm is programmed to do this. PlanB has included this to his Stock to Flow chart — I’ve labelled it.
[What this means in reality is that from 2020–2024, 6.25 Bitcoin has been added to the supply about every ten minutes: from April 2024 that halves to 3.125 Bitcoin every ten minutes: from April 2028, it halves again. You get the picture.)
What struck PlanB when he first made the chart above was that Bitcoin exhibited a regular, 4-year massive price hike, starting like clockwork at the halving and, so far, peaking 18 months later — labelled in the chart. The amazing thing (“amazing” in one way, “obvious” in another way) is that Bitcoin has continued to follow the very simple Stock-to-Flow prediction line: you can see that the black Stock-to-Flow line shoots up at the halving, then the actual prices catch up with it over the next 18 months.
The next halving — halving 4 — is in April 2024, meaning we can look out for a price peak in late 2025.
Will the sun rise tomorrow?
Question: CAN YOU BE ABSOLULTELY CERTAIN THE SUN WILL RISE TOMORROW? Answer NO — it’s in the future, silly!
CAN YOU BE ABSOLUTELY CERTAIN THAT BITCOIN WILL HIT A NEW HIGH PEAK IN LATE 2025? Answer: NO — but it’s totally on track to do so, so it would be extremely unwise to assume anything else. If you think, looking at the repeating pattern of this chart, that it’s 50/50 that there will be a new peak in late 2025, logically, you should perhaps have half your assets invested in Bitcoin. (I believe it’s 99% likely, but I know I‘m more optimistic than most people about this.)
Review your targets for Bitcoin ownership
Bitcoiners say: “stack sats”, — implying that you needn’t buy a whole Bitcoin; buy a tiny bit weekly or monthly, which all adds up (e.g. Coin Corner lets you do this easily). Or re-adjust your holdings any way you think logic dictates.
Every couple of weeks, I meet someone who became aware of Bitcoin when it was £20 or £50 or £100 or £1000 — and didn’t buy any. They ended up “clicking” with it when it was £5k or £10k or £20k — and buying at much higher prices.
I am sure that Bitcoin will be £1m one day, at which point people failing to invest today — when it’s £33k (December 2023) — will wish they had done so or had bought more.
I expect the price to repeat its 4-year pattern next cycle, hitting a bottom in 2027 and peaking again around December 2029. But things can change — so just in case the pattern does not continue, don’t buy more than you can afford. Buy what you’re comfortable with this cycle and plan to top up again in the next.
As a rough guide, looking at the 4-year cycle, it’s a very good time to buy Bitcoin from around 18 months after the peak price (May 2022) up to around the halving (April 2024). And it’s just “a good time to buy it” in the six months following that — to Oct/Nov 2024. From that date, it’s perhaps best to stay away because if the cycle proceeds “as usual”, the newbies start FOMO-ing in, big time. The rapid increase in demand at this point makes the price shoot up unreasonably for six months or so; then eventually, it crashes 80% or so — when those same newbies panic, just after Q4/2025. In general, they simply do not understand Bitcoin, which gets very messy — so be careful. It’s time to watch and not get involved.
We are very early in Bitcoin. I expect the 4-year price pattern we’ve seen so far to continue much the same for at least two more cycles — 8 years plus. So far, it’s bang on track with “the usual 4-year pattern”. But I‘m watching it, in case it changes. My favourite people to watch who help me keep an eye are PlanB, Rational Root, and I also like CryptoCon (though I think his forecast for the Q4/2025 peak is low — at $130,000).
[The peak is hard to pinpoint, so PlanB and Rational Root give a range, both of around $100,000 — $1m. My own price target for Q4/2024, based on “Malc’s Logic”, is £300k-£700k — if the 4-year cycle continues to follow its pattern as closely as it is doing now, in December 2023. We’ll see if I’m right…]
PlanB is always worth following, though his posts are just occasional. He lists many of his interviews on YouTube and posts regularly on Twitter (X). PlanB’s story has never changed because, so far, the four-year cycle has not changed. So, any of his stuff is worth watching/listening to. Here is PlanB’s Dec 2023 video on YouTube predicting over $500k next cycle.
Rational Root is excellent, presenting some original analytical ideas. He obviously has a mathematical brain, but he presents his ideas with clarity and excellent graphics, which help to get his ideas across. He is the lead analyst for a Substack site called Bitcoin Strategy. They provide some content for free, and Root’s excellent charts are behind a low-cost paywall. He has a bunch of very good interviews on YouTube.
CryptoCon boasts about “foreseeing the Bitcoin top in April 2021 and selling everything, then buying back at the following bottom”. This could be just a one-off, so I’m not impressed with that. He’s also relatively new to Bitcoin. But, as with Rational Root, I do like the original analytical slants CryptoCon puts on the analysis of the Bitcoin price pattern. (However, I think his prediction of $130k for the Q4/2025 peak is low.) He has a Substack and posts on Twitter (not on YouTube). His Substack has a paid level, which I won’t pay for now, but I expect to do so from early 2025 to get his take on calling the 2025 market top — when I will look to liquidate part of my Bitcoin.
Wrap-up: Is it safe to invest my money in Bitcoin? Yes — as long as the 4-year cycle continues
The 4-year cycle has been a thing for 12 years: repeating its 4-year pattern very closely, three times. We have to assume it will continue — until it doesn’t (which I’m keeping an eye on). So far, it’s bang on track, so it’s likely it will peak in Q4/25, then again in Q4/29. Following those peaks, it’s likely it will crash to a low 12–18 months after the previous peak.
If you follow me — and the people I recommend in this post — you will get a feel for if we are still on track with the “usual 4-year price pattern”. (Hint — when it crashes to the low, commentators will be saying: “Told you so — Bitcoin is dogsh*t”, and they’ll be wrong. So far, it has recovered each time, as the four-year pattern predicts.)
You might have noticed that if you can predict the highs and lows with the accuracy which has been the case so far, you can maximise profits. You do this by selling (some — 50%?) near the peak and saving it, enabling you to buy back 3–4x as much near the trough. In my first full cycle, I didn’t think of that! This time, I’ll be doing it.
Please make your own investment decisions and treat my posts as pure education, not financial advice.
There are no “affiliate links” in my posts.
HeyMalc @ Twitter