👨‍💻 Hardcoded

Bitcoin bull runs are pre-programmed. Act accordingly.

Contrarians have instinctively challenged that notion. But the idea that bitcoin’s price moves like clockwork is becoming less absurd over time, even to the most pragmatic thinkers.

Last month, on the one-year anniversary of Bitcoin’s fourth halving, we checked on bitcoin miners to gauge their production cost for each coin.

This past weekend has meanwhile put us at five years since the 2020 halving. 

Strangely, post-halving price action this time around has trended almost exactly opposite to how it tracked following the third halving. Let’s take a look at how it all stacks up.

First of all, it’s no secret that Bitcoin halvings tend to overlap with bull market cycles.

What’s iffy, at least for bears and the perma-sidelined, is whether halvings inherently cause major rallies.

Since Supply Shock is literally the name of this (very educational, non-financial-advice) newsletter, it’s clearly not up for debate. 

Bitcoin’s inflation rate is periodically cut in half, doubling the cost of production and leading to a series of supply crunches over the next few years as sell-side liquidity dries up, each one reflected in a new all-time high.

The chart below plots bitcoin price movements around halvings. The lines start six months prior to each halving and extend until the next one, in total covering around four and a half years. As you can see, halvings two and three generally followed a similar trajectory, even if the purple line is much less volatile.

We already know that bitcoin returns have diminished every four-year cycle. The pattern is shown here — bitcoin’s rally topped out at more than 4,200% in the 2016-2020 cycle but “only” managed about 700% between 2020 and 2024. 

Bitcoin has otherwise risen by as much as 260% or so since last April’s halving, although we’re technically only about 27% of the way to the next one. That’s a lot of room to move!

The bitcoin market is also vastly different in 2025 than it was in 2017. So, it makes much more sense to only compare this cycle to the one directly prior.

Notice that for the six months leading up to each halving — purple in 2020 and pink in 2024 — their respective lines are inversely correlated. When bitcoin was going down in the weeks before the 2020 halving, bitcoin was going up in the equivalent period in 2024 amid buzz for bitcoin ETFs.

The same effect can be seen starting just over 200 days on from the halving. The pink line starts to go down as the purple line keeps going up to its May 2021 peak.

There are plenty of price targets out there for those wondering just how far bitcoin might have left to run in this cycle. 

With bitcoin still 5% below its most recent all-time high set in January, we’re all just waiting for the pink line to meet the purple line and never look back, for once this cycle.

— David

From bull runs to bank runs: Tether’s historic $16 billion redemption streak kicked off at this point in 2022.

Terra had collapsed only days before, wiping about $40 billion from crypto markets across both the stablecoin and its sister token, LUNA. Bitcoin dipped to 16-month lows of $30,000 alongside the crash.

At the same time, Tether was swapping billions of tethers for US dollars to service redemptions, and by July had burned more than 20% of its supply.

Whales returned in force six months later, driving Tether’s supply back to pre-Terra levels within half a year. Tether’s circulation has since grown by an additional $66.5 billion and is currently just ~$20 million short of reaching $150 billion for the first time.

What a difference three years (and one halving) make.

— David

• American Bitcoin, the bitcoin mining firm backed by Donald Jr. and Eric Trump, is going public through an all-stock merger with Gryphon Digital Mining.

• David Bailey’s Nakamoto Holdings is merging with healthcare company KindlyMD to build a bitcoin treasury. The stock will continue trading on the Nasdaq under KDLY, pending a new ticker.

• MicroStrategy bought 13,390 BTC last week for $1.34 billion. Total holdings: 568,840 ($59.3 billion), nearly 3% of the current supply.