Bitcoin's Predictable Cycles Are A Double-Edged Sword

Cool sword picture, which could represent Plebs fending of attacks from bad actors. Picture Credit: Unknown

Hi Plebs,

Bitcoin's price cycles have followed a clear path over time. They show a "boom and bust" pattern every four years. This predictability benefits ethical investors. But, it also exposes opportunities for market exploitation by bad actors.

Bitcoin's cycles are predictable. Its fixed supply schedule and halving events drive them. Every four years, Bitcoin halves the mining reward for new coins. This creates a consistent pattern of scarcity and growing demand. That pattern fuels price rallies.

For good-faith investors, this predictability can be a boon. They time their market entries and exits well. They buy Bitcoin during dips and sell during price surges. This allows them to shield their investments from volatility. It also lets them make big gains.

Bitcoin's ups and downs are good for patient investors who get the market. If you can time your buys and sells, you can make a killing during each bull run. Or, the investor can buy bitcoin and hold through bear markets. They can expect a price increase during bull markets.

But, ethical actors enjoy predictability. It also lets bad actors exploit investors. For example, investors known as VCs exploit Bitcoin's cycles. They do this by launching "pump-and-dump" schemes.

During a bull market, these VCs will often create low-quality "altcoins". They use their resources to inflate the prices. The VCs will lure in retail investors. Then, they will sell their holdings. This will crash altcoin prices and leave ordinary investors with big losses.

The problem is that Bitcoin's cycles are so well-known that bad actors can game the system. They use the market's predictability to enrich themselves. They do this at the expense of unsuspecting investors.

Bad actors also use another tactic. They promote ideas or projects on the Bitcoin network. These ideas aim to undermine the system. These "attacks" may be proposals for protocol changes. Or, they may be the creation of competing chains. Both aim to sow confusion and erode trust in the original Bitcoin timechain.

But, Bitcoin's proof-of-work is strong. So, those who try to act in bad faith will fail. Bitcoin will always expose those who are trying to game the system. The bad actors may profit in the short term, but they will always lose in the end. These losses tell a clear story. They are as visible as the bull and bear markets.

Bitcoin's cycles are predictable. They are a double-edged sword. They offer chances for both good and bad actors. Ethical investors can use this predictability. Bad actors will keep trying to exploit it for their own gain. Bitcoin users' key task is to stay alert. They should learn about the market. They should support the network's core ideas: decentralisation and censorship resistance.

Cheers, and onwards with Bitcoin