Many investors recommend a “buy and hold” strategy. While I have done very well with Bitcoin by following that strategy, I have also noticed that Bitcoin appears to have fairly predictable timing characteristics. My cost-basis in 2012 was $20 per Bitcoin. As I write this, the latest quote was $119,000 per Bitcoin. A “buy and hold” strategy has certainly yielded significant gains in thirteen years of holding.
But what could have been accomplished if I had pulled out of Bitcoin during the down years? We now know the down years are year two of the four-year cycle (2010, 2014, 2018, 2022, and upcoming 2026). Can even more gains be made by exchanging negative-growth quarters for a higher yielding investment? That is what I explore with this article.
It is well established that Bitcoin has a four-year cycle that drives Bitcoin price (exchange rate) more than any other factor other than adoption rate (the rate Bitcoin is becoming accepted and used by the population). The normally unruly graph of historical prices becomes very tidy when the four-year cycle is used to overlay each of the four cycles that have now occurred over the last sixteen years. The following is a summary of the rates of return for each quarter of each of the four years in the cycle:
| Quarter & Cycle Year | Lowest RoR | Max RoR | Median RoR |
| Q1Y1 | -13% | 85% | 27% |
| Q2Y1 | -43% | 124% | 40% |
| Q3Y1 | 43% | 72% | 58% |
| Q4Y1 | -3% | 240% | 118% |
| Q1Y2 | -53% | 0% | -27% |
| Q2Y2 | -53% | -7% | -32% |
| Q3Y2 | -58% | -7% | -32% |
| Q4Y2 | 0% | 2% | 1% |
| Q1Y3 | -42% | -15% | -25% |
| Q2Y3 | -22% | 67% | 18% |
| Q3Y3 | 5% | 155% | 57% |
| Q4Y3 | -21% | 83% | 43% |
| Q1Y4 | -5% | 55% | 15% |
| Q2Y4 | -9% | 62% | 31% |
| Q3Y4 | -9% | 15% | 1% |
| Q4Y4 | 58% | 201% | 110% |
The negative growth (i.e.: losses) of year two in the cycle are still very evident in this data. The highest quarterly yield in all four “year two” quarters is 2%. Most individual quarters are losses. Year two should clearly be avoided in the cycle…all four quarters.
A new quarterly pattern emerges though. The third quarter of every single year turns out to be the most predictable return. The fireworks happen in year one and year four during the fourth quarter, but the third quarter is extremely predictable. That tames Bitcoin investment considerably.
The third quarter of year one shows a range of 43% to 72% return on investment. That isn’t annualized. That is actual return for only one quarter of investment!
Year two in the cycle (2026 and 2030) should be avoided, but, once again, the third quarter is the most predictable. It ranges from only 0% to 2% growth. It is the least damaged during the year 2 cycle (actually posting a tiny gain sometimes).
The third quarter of year three also consistently loses; The range 1s -21% to -8%.
Quarter three of year four ranges from -9% to 15%. It is the only third quarter that crosses the zero line making it sometimes a loss and sometimes a gain.
That narrows down the times of optimized Bitcoin investing quite a bit. If an investor avoided these pitfalls and instead invested in a more predictable gain investment during these times, an extraordinary gain is possible. Of course, turning $20 into $119,000 in thirteen years is a respectable outcome. “Buy and hold” is time tested and proven.
Only you know your investment goals and your tolerance for risk. Have fun!
James D. Brausch is a life coach specializing in wealth, health, education, and relationships. He can be reached at jamesbrausch@proton.me or via postal mail at P.O. Box 1502, Carmichael, CA 95609-1502.