Compiled & translated by: TechFlow TechFlow
Guest: Michael Terpin
Host: Bonnie
Podcast source: Bonnie Blockchain
Original Title: Important! Cryptocurrency Guru: Whales Are About to buy the dips Here! Michael Terpin [Bonnie Blockchain]
Broadcast date: March 21, 2026
Key points summary
Michael Terpin, hailed as the godfather of cryptocurrency, has delivered one of the most brutal predictions yet regarding Bitcoin, suggesting it's returning to its "mathematical fate." Terpin reveals how institutions artificially accelerated chart movements using tweets about a 10/10 tariff. Facing the ultimate defense line of $42,000, Terpin advises investors to abandon blind optimism and wait for a "winter" of capitulation and sell-off. For young people, accumulating one BTC remains the only certainty in weathering fiat currency devaluation and achieving intergenerational wealth accumulation.
Summary of key viewpoints
The mathematical logic behind Bitcoin's "46-month cycle"
- Historically, the core characteristic of Bitcoin's four-year cycle still holds true. In fact, the so-called "four-year cycle" is not strictly equal to four years, but is closer to a cycle of 46 months.
- Satoshi Nakamoto's design goal was to make the average block time 10 minutes. However, in reality, block time is affected by the network's total computing power and mining difficulty. ...The halving time is "accelerated".
Insider information about the manipulation of the "10/10 sell-off".
- This sell-off was not accidental, but an organized operation. Between 9 a.m. and 5 p.m. New York time, there were continuous sell orders in the market, which was clearly an organized operation and completely different from random panic selling by retail investors.
- Rumors suggest that Morgan Stanley sent a memo to brokers minutes before the tweet, advising them to "sell Bitcoin and MicroStrategy shares." This sell-off also reportedly involved "automatic deleveraging" by market makers.
Bloody predictions about the bottom of this bear market
- I don't think it's reasonable for a bear market to last only six weeks; similarly, I don't think it will end in just four months. This would disrupt the rhythm of subsequent market cycles.
- I don't think the price will fall below $42,000. I expect the pullback to be somewhat "milder," but it will certainly still be more than 50%.
- When the price of Bitcoin drops to the $50,000 or even $40,000 range, you'll see mainstream media start reporting that "Bitcoin is dead"—and this is often the best time to buy.
On the "Four Seasons Theory" and Buy/Sell Points
- Bitcoin's "autumn" begins the day the market bubble bursts; and when the market experiences "capitulation," that is, the day the price bottoms out, Bitcoin's "winter" officially begins.
- The best time to buy in each Bitcoin cycle is during the "winter." The best time to sell is at the end of the "summer," when the price is within 20% of its peak.
Practical advice on DCA (Discounted Dollar-Cost Averaging)
- Regular fixed-amount investment (DCA) is generally an effective investment strategy, but it is not suitable during market downturns. As the market declines, DCA only lowers your average cost basis as prices fall, potentially leading to even greater losses.
- A more reasonable use of DCA is to start buying from the bottom of the market and continue buying until the price enters an upward phase.
Regarding the next halving (2028) and the supercycle
- The 2024 halving price was $63,900, and I believe the next one will at least double that, and possibly even approach $200,000. We will see for the second time that Bitcoin's price reaches a new all-time high before the next halving.
- The so-called supercycle, which is the "diminishing returns" phenomenon we are currently seeing in the Bitcoin cycle, may be replaced by the S-curve of adoption.
Intergenerational wealth goals for young people
- For the average person, having just one Bitcoin is enough.
- If you own one Bitcoin and plan to retire in 40 years, I find it hard to imagine that Bitcoin's price will be less than $10 million by then. Therefore, one Bitcoin can become a form of intergenerational wealth.
Bitcoin Cycle Update
Bonnie: Welcome, Michael Terpin ! You are the founder and CEO of Transform Ventures and the co-founder of Bit Angels. Your book, The Bitcoin Super Cycle, is also a bestseller, and we'll talk about it in more detail later.
You predicted in your book a year ago that the market bubble would eventually burst—and now it seems that your prediction has indeed been proven true.
Michael Terpin:
Last year, there was much debate in the market about whether Bitcoin's "four-year cycle" had ended. Many prominent figures, such as Raoul Pal and Arthur Hayes, as well as some ETF executives, believed that "from now on, the price of Bitcoin will only continue to rise, and there will be no more major crashes; institutional investment will become the main driving force; cyclical fluctuations may disappear, or the cycle will become five years." But as it turned out, their judgment was wrong.
To date, the core characteristics of Bitcoin's four-year cycle still hold true. Historically, the bubble has burst in the fourth quarter of the year following each halving. However, as halvings are occurring earlier, the next bubble burst may occur at the end of the third quarter.
Actually, the so-called "four-year cycle" is not strictly equal to four years, but rather closer to a 46-month cycle. Otherwise, the halving date would be fixed on January 3rd, the anniversary of Bitcoin's genesis block. But in reality, the first halving occurred 47 months after the genesis block was created.
Furthermore, China's restrictions on Bitcoin mining in 2016 also significantly impacted the halving timing. At that time, due to policy restrictions, many mining farms were forced to relocate to other regions, such as Texas in the United States. This caused a change in the network's block generation speed, bringing the halving date forward from the originally planned November to July. Therefore, that cycle was approximately 44 months, while subsequent cycles were 46 months (halving in May) and 47 months (halving in April). Following this trend, we anticipate that the 2028 halving may occur in March, with a cycle length of approximately 47 months, and could even extend to 48 months in the future.
Bonnie: Could you elaborate on the impact of China's 2016 mining ban on Bitcoin?
Michael Terpin:
Of course. The 2016 mining ban had a more significant impact on the Bitcoin network than the most recent one. At that time, many miners rushed to set up new mining farms in other regions, with most eventually migrating to Texas, USA.
As I mentioned in the "Mining" chapter of the book, Bitcoin is not designed based on a fixed four-year cycle, but rather halves every 210,000 blocks.
There are a total of 33 halvings, gradually distributing all Bitcoins. Satoshi Nakamoto's design goal was to make the average block time 10 minutes. However, in reality, block time is affected by the network's hashrate and mining difficulty. If the hashrate suddenly drops, the block generation speed will temporarily increase, causing the 210,000th block to arrive earlier, thus "accelerating" the halving time.
This Bitcoin sell-off was intentional.
Bonnie: You posted on February 10 that an “AI legend trader” who has been trading in the market for over 50 years believes that this Bitcoin sell-off is not accidental, but an organized action.
Michael Terpin:
That's right. The person you mentioned is Peter Brandt. He's a very well-known investor and trader in the traditional finance (TradFi) sector, and he also frequently offers unique insights into the cryptocurrency market. Recently, there has been a lot of discussion about "institutional entry" and the impact of institutional trading on the market.
One significant change is that trading patterns have become more "structured." Take this sell-off as an example: after the black swan event on October 10th, a death cross appeared in the market. At that time, a large market maker was believed to be behind it—although we cannot be completely certain which one it was, it was certain that this was a large-scale, planned sell-off.
For example, if you notice a continuous stream of sell orders appearing in the market between 9 a.m. and 5 p.m. New York time, this is clearly organized activity, completely different from the random panic selling by retail investors. We can clearly see this phenomenon. A significant characteristic of institutionalized trading is that trading activity is more concentrated during the "9-to-5" workday, rather than the random, all-day trading of the past. This change has had a profound impact on the market.
Another noteworthy change is that in the last bear market, we rarely saw large-scale "on-chain" sell-offs. Now, with the involvement of institutions, the impact of derivatives trading has become more significant.
Bonnie: You mean, institutions sell first, and then retail investors follow suit?
Michael Terpin:
That's a fair assessment. Retail investors typically make decisions based on charts because everyone is looking at them. The 10/10 event actually accelerated the changes in chart patterns.
In fact, I had long anticipated that this cycle would end in the fourth quarter, but I couldn't pinpoint the exact month. Several models were available for prediction: some pointed to October, others to December. Interestingly, one model had proven its accuracy for three consecutive cycles—the time interval from bottom to top was 35 months, a pattern that had held true three times in a row.
Bonnie: What would have happened if the 10/10 incident hadn't occurred?
Michael Terpin:
Without the 10/10 event, we were actually trying to break through the strong resistance level of $125,000. We hadn't been able to effectively break through $120,000 since Inauguration Day. In the summer, the market experienced "liberation day," with prices briefly dropping to $75,000. At the time, I tweeted that prices had bottomed out and wouldn't go lower until the end of this cycle, but as it turned out, the cycle didn't end.
The so-called "Bitcoin summer" refers to the period from the first all-time high of this cycle to the final bubble pops, which typically lasts 9 to 11 months. If this period is much shorter than expected, it is contrary to historical patterns.
Similarly, when prices fell to $80,000 after the 10/10 event and rebounded quickly, many people thought the bear market was over. But I thought to myself, it's only been six weeks, how could it end so quickly?
To be honest, I'm a bit disappointed. Mainly because, from a price perspective, this time the price didn't reach the median of my predicted range. My initial prediction was that the price would be roughly three times the price at the time of the halving, fluctuating slightly depending on macroeconomic factors, but the actual performance this time fell short of my expectations.
How low will Bitcoin drop this time?
Bonnie: The retracement magnitude of each Bitcoin bear market has been decreasing: the first retracement was 94%, followed by 87%, 84%, and 77%. So, in this round, can we expect a retracement of approximately 65% to 70%?
Michael Terpin :
If the top has been confirmed, that's what I predicted. Because the price action this time didn't meet my expectations—it only doubled instead of tripling as I anticipated. Therefore, I think this round of pullback might be more "mild," but it will certainly still exceed 50%.
Bonnie: Actually, we've already been in that range, haven't we? From 126 to 60, then a rebound. Now a lot of people are saying, "The bear market is over."
Michael Terpin:
I haven't seen any data to support this conclusion. Historically, it usually takes about a year from the top to the bottom. This has been the case for the last three bear markets: the bear market four years ago lasted a year minus three days; the bear market before that lasted a year and two weeks; and the earliest halving cycle also lasted about a year.
As I said before, I don't think it's reasonable for a bear market to last only 6 weeks; similarly, I don't think it will end in just 4 months. This would disrupt the rhythm of subsequent market cycles.
In particular, if we assume that the market cycle from bottom to top is approximately 35 months, then a bear market ending too early would make the bull market seem very short. In that case, the market might need to make up for the time lost by shortening the "advancement phase" (similar to a "springtime") in the middle of the bull market.
Bonnie: When you mention a year, do you mean a year from the top to the bottom?
Michael Terpin:
That's right, it takes about a year from the top to the bottom. This is one of the most stable patterns in the Bitcoin market cycle.
Michael Terpin:
I would suggest everyone observe the charts first. Currently, we haven't seen any truly "major negative" news. Historically, bad news during bear markets tends to be amplified by the market, while it's often ignored during bull markets; conversely, good news during bear markets usually doesn't trigger price increases.
In the last bear market, the first event to trigger a significant drop was the collapse of the Terra/Luna project. At that time, Bitcoin was priced at over $60,000, experiencing a period of fluctuation and even a "dead cat bounce." By the end of the first quarter, Bitcoin was still around $50,000—five months after the halving—and many believed the price would continue to rise, thinking the bull market was far from over. But the Terra/Luna collapse brought the market back to reality, with the price plummeting to below $40,000.
Then the FTX incident occurred, which truly marked the bottom of the bear market. At that time, the price not only fell below the 200-week exponential moving average (EMA), which is typically breached during a bear market, but even almost touched the 300-week EMA. Although some people claimed on Twitter that "I have placed buy orders for 5K or 2K Bitcoin," I knew the price couldn't possibly fall that low. As it turned out, that was the bottom of the market.
One way I can confirm that this is the bottom is this: even after Genesis Lending's bankruptcy following the FTX incident, Bitcoin's price didn't fall further. This indicates that no one in the market was willing to continue selling. Those who didn't sell during the Terra/Luna, Celsius, and FTX events have become "long-term holders," and they won't sell at a lower price anymore. After the short-term panic selling clears out, the price naturally stops falling. At this point, whales usually start "buy the dips."
Some whales I know have even told me privately, "I'm about to make the biggest Bitcoin purchase of my life." Sure enough, the price of Bitcoin has been rising ever since.
Bonnie: Will you announce the bottom on Twitter?
Michael Terpin :
Yes. I will announce it publicly on Twitter once I confirm that a bottom has formed.
Most likely black swan event
Bonnie: Looking back, was the 10/10 event the first bad news of this bear market?
Michael Terpin:
October 10th can indeed be considered a "black swan event" because it was completely unexpected: no one could have predicted Trump's tweet; no one anticipated Binance would force market makers to deleverage; and no one expected the market to drop so quickly in such a short period. The crypto market is still relatively small and fragile. It seems that just one large market maker placing massive sell orders for five consecutive days could have driven the price down, even rendering buying pressure insignificant. If they had continued selling for another 10 days, the price could have fallen to around $50,000.
However, I believe the market will rebound at some point because these market makers cannot own an unlimited amount of Bitcoin. To protect their collateral and other assets, they will eventually sell off all their holdings.
Bonnie: We've discussed before that bear market retracements could be 65% to 70%. I did the math, which means Bitcoin could potentially fall to between $44,000 and $38,000.
Michael Terpin:
Yes, I don't think the price will fall below $42,000. This round's top is already much lower than the last one. Last time, although it was only "slightly higher" than the previous all-time high, the final retracement still reached 75%.
Just yesterday (though I know this episode might have aired some time ago), BlockFills—a major player in traditional finance and deeply involved in Bitcoin options trading—announced a suspension of withdrawals, stating they were dealing with liquidity issues. I have a friend who works at that company, and we talked a few weeks ago; at the time, I didn't see anything wrong. But in the history of cryptocurrency, whenever a company announces a "suspension of withdrawals," it's usually not far from bankruptcy. I'm not saying BlockFills will definitely go bankrupt, but their trading volume last year was a staggering $61 billion.
If they are ultimately unable to fill the funding gap, it could cause "collateral damage" to the market, potentially leading to an event similar to the FTX crash.
In the last bear market, much of the bad news focused on the "Bitcoin lending" sector, particularly the chain reaction triggered by these institutions lending Bitcoin to counterparties like FTX. This bear market could see a similar wave of bankruptcies. For example, if prices fall to $45,000, and some derivatives exchanges are engaging in high-risk trading with their own funds or even customer funds—a common practice among centralized companies—the market could panic, and users would begin withdrawing funds en masse. This situation would create a "self-fulfilling prophecy": the more withdrawals, the tighter the platform's liquidity, and the more likely the platform would restrict withdrawals, which typically leads to further market declines until the true bottom is found.
Interestingly, market bottoms almost always occur late in a bear market, which typically happens in the third quarter of the year following the halving. I believe it's not bankruptcies that cause bear markets to bottom out, but rather the market cycle itself that dictates their occurrence. Bear markets trigger corporate bankruptcies, which in turn exacerbate the market decline, ultimately helping the market find its true bottom.
Bonnie: If institutions already knew about this cycle, why couldn't they prepare in advance?
Michael Terpin:
Because they deny the existence of cycles. Many people are now saying, "The cycle is over." I'll be giving a presentation on this topic this afternoon. For example, Matt from the Bitwise ETF has been saying: cycles are no longer important; Bitcoin's price will only go up, not down; it's now an institutionalized asset class and will be as stable as gold, silver, or the stock market. I think there are more people saying "The cycle is over" than those who believe "Cycles still dominate the market." And I feel like someone shouting in the wilderness: just look at the math, cycles still control market movements.
Bonnie: But if everyone says the cycle is over, and institutions don't care about the cycle—and institutions are the big money in the market—can't they control the supply and demand in the market?
Michael Terpin:
Institutional funds have not yet reached their "maximum" level. While institutional holdings are already substantial, whales (large investors) hold even more Bitcoin. Institutions are currently in a "testing the waters" phase, typically not directly buying Bitcoin in the spot market, but rather participating more in derivatives trading, such as through ETFs. Compared to directly purchasing Bitcoin, institutions can obtain better margin terms on ETFs or other derivatives.
According to data I've recently seen, approximately 20% of Bitcoin trading volume currently comes from derivatives, while 80% comes from spot trading. The situation is exactly the opposite in traditional financial markets: 80% is derivatives trading.
Bonnie: So when institutions buy in—excluding, of course, examples like Michael Saylor who buy in large quantities directly—most others do so through derivatives rather than by directly buying Bitcoin spot?
Michael Terpin:
Yes. Or rather, it's a combination: ETFs issued and operated by institutions are mostly bought by retail investors.
Institutions will tell “newbie retail investors”: “It’s safe to buy Bitcoin now.” Those who once criticized Bitcoin as a “Ponzi scheme” when it was only $100 or $1,000 are now promoting Bitcoin by charging commissions and advising retail investors to allocate 1% to 5% of their assets to Bitcoin.
ETFs operate by trading only during market hours and settling before the next trading day. Institutions control this capital and manage risk by hedging their positions. In terms of management fees alone, IBIT (Bitcoin ETF) has become one of the most profitable businesses within the BlackRock ecosystem.
Prerequisites for dollar-cost averaging in Bitcoin
Michael Terpin:
Dollar-cost averaging (DCA) is generally an effective investment strategy, but it is not suitable during market downturns. This is because as the market declines, DCA only lowers your average cost basis as prices fall, potentially leading to even greater losses.
I believe that if you have a fixed disposable income each month, a more reasonable use of DCA is to buy from the market bottom and continue buying until the price enters an upward phase. When the market is in the upward phase where you are likely to profit the most, you can appropriately accelerate the pace of buying.
Conversely, during market downturns, I recommend holding cash or other low-risk assets. For example, you could keep your funds in an interest-bearing account or invest in gold. If you're in a tax-sensitive jurisdiction like the US, another good cash investment option is the SRC (Structured Return of Capital) structure used by Michael Saylor. This investment vehicle is designed to achieve a "return of capital," and currently offers an annualized return of approximately 11.25%—which he recently increased. This return is almost three times that of T-Bill (US Treasury) money market accounts.
If you buy this instrument, I recall its ex-dividend date is around Friday. Before the ex-dividend date, its price usually rises slightly; and when Bitcoin's price falls, its price follows suit. I missed a buying opportunity last week because I didn't place an order with my brokerage beforehand. Its price briefly dropped to around $94, which presented a good buying opportunity for investors. In other words, you could have bought at a lower price and gained an additional effective profit of about 5%, assuming its face value or target price is $100.
This investment structure is ingeniously designed. Those who believe "Michael Saylor will go bankrupt when Bitcoin's price falls to a certain level" don't truly understand his financing and investment strategy. These investment vehicles are essentially stocks or securities, which can stop paying dividends or even modify dividend terms as needed. As long as he can continue to pay high dividends while maintaining sufficient cash reserves to cover them, I don't think he'll encounter financial problems.
Even if the price of Bitcoin falls to $20,000, he will continue to buy. His core investment logic is based on the assumption that Bitcoin will grow at an average annual rate of approximately 21% over the next 20 years, while his financing costs are around 10%. Mathematically, this strategy is entirely feasible.
Bitcoin Four Seasons Theory
Bonnie: I remember you mentioned the "four seasons theory" of Bitcoin before. Could you explain it in more detail for those who didn't watch the last episode?
Michael Terpin:
Of course. Satoshi Nakamoto stated in the Bitcoin white paper that as long as the number of new Bitcoins purchased in the market exceeds the number of Bitcoins mined by miners every four years, the price will definitely rise. This is based on the fundamental economic principle of supply and demand. This theory has held true so far.
At the first halving, Bitcoin's price was $12.70; at the second halving, it was $670; at the third halving, it was $8,700; and at the fourth halving, the price had reached $63,900. After each halving, the price of Bitcoin surged.
Bonnie: And as long as new buying exceeds new Bitcoin mining output, the price will continue to rise. Currently, new Bitcoin mining output is very low. From an annual inflation rate perspective, Bitcoin is even scarcer than gold. Bitcoin's annual inflation rate is about 0.8%, while gold's is about 1.5%. In fact, gold's inflation rate may be even higher, as rising gold prices stimulate more capital inflows into the gold mining industry. Some mines that were unprofitable when gold was at $2,000 may become profitable when gold reaches $5,000.
Michael Terpin:
That's right, this is exactly what Satoshi Nakamoto mentioned in the white paper, and his theory has proven to be correct. While the dramatic fluctuations in the Bitcoin market may scare away some retail investors, if you understand the nature of these fluctuations, you'll find it presents a huge opportunity. Market volatility primarily stems from people's fear and greed.
Since 2015, I've noticed a recurring pattern in the Bitcoin market. This pattern always occurs in the exact same order and is driven by fear and greed. I've summarized this pattern as Bitcoin's "Four Seasons Theory."
Bitcoin's "spring" begins on the day of the halving. On that day, miners' profits are immediately halved. For miners, this means their profit margin suddenly jumps from 10%-20% profit to 30%-40% loss. Especially in the early days of Bitcoin's development, many miners shut down their mining rigs because they couldn't afford the losses. Although miners today usually have more funding sources, such as bank loans or support from publicly listed companies, they still use this time to upgrade their equipment because continuing to mine in the early stages of a halving is generally unprofitable.
To maintain the network's normal operation, Bitcoin's mining algorithm adjusts based on changes in computing power. If the computing power participating in mining decreases, the system lowers the mining difficulty to ensure that blocks are generated every 10 minutes. With the combined effect of decreasing mining difficulty and gradually increasing market demand, the price of Bitcoin will begin to slowly recover, but overall, the price trend during this "spring" period is mostly sideways.
The last time Bitcoin experienced a "spring" lasted seven months, the longest in its history. In previous cycles, "springs" were typically the shortest phases. For example, the "spring" after the first halving lasted only four months. A "spring" refers to the period between a Bitcoin halving and the price reaching a new all-time high. Taking the most recent halving as an example, April 19, 2024 was Bitcoin's halving day, and the price was $63,900. Six months later, the price was still hovering around $64,000, with little significant change. During this period, there were some price fluctuations, such as a drop due to a sell-off in the German market and yen carry trades; subsequently, the price also rose, but encountered strong resistance near $70,000 and failed to break through.
A month before the halving, Bitcoin's price briefly hit a new all-time high of $73,850. This phenomenon sparked widespread discussion in the market. Some commentators argued that this indicated Bitcoin's market cycle had "broken down," because according to traditional cycle theory, new highs for Bitcoin typically occur a year after the halving, and are unlikely to be reached before the halving.
I addressed this point specifically when I published my book. I believe this phenomenon didn't break the market cycle, but rather reset the price threshold for Bitcoin to enter "summer." Before this event, Bitcoin only needed to break $68,000 to enter "summer"; now, that threshold has been raised to $73,850.
In the book, I also predicted that if Trump won the US election, the macroeconomic environment would be more favorable for Bitcoin's price increase, and this breakout could occur in early November. Even if Trump did not win the election, this breakout would likely occur in late December. Ultimately, Trump won the election, and Bitcoin reached a new all-time high on election day (November 5th).
I recall predicting that Bitcoin might break $100,000 in early to mid-December if that were the case. We did reach that goal, and the price rose steadily until Inauguration Day when a "sell the news" phenomenon occurred, nearly pushing the price to $120,000. After that, the market entered a period of sideways movement, with the price falling to $75,000 before rebounding to $126,000. This volatility persisted for almost the entire year. We consistently failed to break through the $125,000 resistance level. I believe the biggest reason was market uncertainty regarding tariff policies.
Bonnie: So what season are we in now?
Michael Terpin:
We are currently in the "autumn" phase.
Bonnie: Can you predict the market trend over the next four years?
Michael Terpin:
Before answering this question, let me first explain the "four seasons theory" of Bitcoin. Bitcoin's "autumn" begins on the day the market bubble bursts; and when the market experiences "capitulation," that is, the day the price bottoms out, Bitcoin's "winter" officially begins.
Many people use the term "Crypto Winter" to refer to a period of low market sentiment and price declines. However, in my definition, the "Bitcoin winter" is actually the best time to buy. This is because during this phase, all short-term speculators have left the market, market panic has reached its peak, and prices have no further room to fall; they can only begin to gradually recover.
From a long-term investment perspective, the best time to buy in each Bitcoin cycle is during the "winter." The best time to sell is at the end of the "summer," when the price is within 20% of its peak. While some people can pinpoint the exact highest point, this is extremely difficult. Therefore, the ideal strategy is to sell near the peak and buy back near the bottom. Typically, bottoming takes a long time because the market tends to be sluggish in the bottoming area, with many even believing that "Bitcoin is dead."
In fact, we're already seeing headlines like "Bitcoin is dead." Last weekend, the Financial Times reported that Bitcoin's price had fallen to $60,000, adding that "that's still $60,000 higher." Later, as Bitcoin's price rebounded to $70,000, they had to change their headline. Meanwhile, figures like Peter Schiff and Nouriel Roubini have also come out to predict Bitcoin's demise, claiming it will go to zero.
When Bitcoin's price drops to the $50,000 or even $40,000 range, you'll see mainstream media outlets like CNBC and CNN start reporting that "Bitcoin is dead"—and this is often the best time to buy. In the short term, the first day of the "Bitcoin summer" is usually a very good buying point because the price rises very rapidly during this phase.
Therefore, returning to the strategy of Regularly Deposit-Amount Investing (DCA): a better approach is to reserve a portion of your funds, invest a portion at the start of Bitcoin's "summer," and then invest another portion at the start of its "winter." If you don't intend to hold Bitcoin long-term, your returns will largely depend on your ability to correctly identify the top and bottom of Bitcoin's "autumn."
To reiterate my analysis: If you bought 1,000 Bitcoins at $12,700 during the first halving and held them until today—and what's the price today? $67,000?—you would have turned $12,700 into $67 million. That return far surpasses all other asset classes. If you were able to sell near the top, say around $100,000, you could even turn $12,700 into $120 million. That's equivalent to a 10,000x return.
Of course, the first cycle is the hardest to execute. If you sell 1,000 bitcoins near the top at $1,000 and then buy them back at the bottom around $250, you might end up with 4,000 bitcoins. Four years later, if you continue with a similar strategy, you could grow your assets to 16,000 bitcoins. Four years after that, you might not have "exactly" 64,000 bitcoins, but you could have close to 60,000. As the market matures, we may no longer be able to achieve 4x growth through precise market timing, but I believe it's still possible to achieve close to 2x growth in the next two cycles, especially if a "super cycle" kicks in.
The so-called supercycle, which we are currently seeing in the Bitcoin cycle as "diminishing returns," may be replaced by the S-curve of adoption. Currently, only about 4% of the world's population owns Bitcoin, while 95% of the total Bitcoin supply has already been mined. Where will these Bitcoins come from when 20% or 30% of the world's population owns at least one? They will no longer come from miners.
Where is the best time to buy?
Bonnie: We've talked about potential lows. What about potential highs?
Michael Terpin:
I believe the next one will be our first real opportunity to enter a "super cycle." I mean, there is a theoretical opportunity this time, but because it's the first time institutions are entering the market, they're able to do things like actually providing huge sums of money to whales who want to sell Bitcoin.
Let's say you're a whale, you have a regular 9-to-5 job, and you mined Bitcoin when it was worth 2 cents. Now you own 10,000 Bitcoins and have been hodling them. Maybe you've even taken out some mortgages with your Bitcoins and watched their value rise. You might have used those Bitcoins to buy a house, but not a particularly luxurious one.
Suddenly, Galaxy Digital calls you and says, “Hey, Michael Saylor wants to buy an unlimited amount of Bitcoin. Would you be willing to sell some for $120?” Then your wife might say, “Honey, that’s almost $1,005 million. Should we sell half? You can buy it back later.”
Therefore, this does not mean that whales have decided to completely withdraw from the Bitcoin market. In fact, one expert from the traditional financial world called it Bitcoin's "IPO moment," meaning that the early "founders" have begun selling Bitcoin.
Of course, they don't completely sell off their shares and leave. Like the founders of Facebook, they might not buy back the stock, but they'll continue to benefit from new share allocations. However, if you look at the on-chain data, you'll find that whales do buy back after selling. They sell at the high and buy back at the low, which is exactly the strategy I recommend: sell high, buy low.
For example, a whale wallet holding approximately 15,000 bitcoins transferred some of them to the Kraken exchange and subsequently disappeared. If he did sell those bitcoins, he would almost certainly have bought them back when the price was lower. Imagine if you sold $1 billion worth of bitcoins and then bought them back when the price halved or fell below that. Not only would you regain the same amount of bitcoins, but you would also have an extra $500 million in cash to buy anything you and your family want, such as a private jet.
Bonnie: Then why not just use Bitcoin as collateral for a loan?
Michael Terpin:
You can use Bitcoin as collateral for loans, but if you sell high and buy back low, you can earn more from an "absolute return" perspective. Of course, this also depends on your tax situation. If you live in Puerto Rico, there is zero capital gains tax; if you live in places like Hong Kong, Singapore, or Dubai, wealthy people in those places don't pay capital gains tax either. So if you don't take advantage of this method, you're wasting a money-making opportunity.
I spoke with some Bitcoin miners in the US, and they said they can no longer truly control the Bitcoin supply because the block reward has become extremely low. In fact, they've never had complete control over the supply. Previously, 7,200 Bitcoins were mined daily, but now only 3,125 are mined every 10 minutes, totaling only 450 per day.
Last year, Michael Saylor bought the equivalent of a year's Bitcoin supply in a single month. He bought approximately 20,000 Bitcoins. While I don't remember the exact number, it's a huge sum, even if not a full year's supply. 450 Bitcoins per day, multiplied by 365 days, gives you the annual supply. Currently, institutional purchases far exceed miners' output.
This is why some people say "the cycle is dead": they believe that current Bitcoin production is too low to be significant. However, production isn't actually insignificant; the key is the ratio of purchases to production. If no one is buying, production does indeed seem low. But when purchases far exceed production, the price will continue to rise.
Satoshi Nakamoto's theory still holds true: within a four-year cycle, as long as the amount of Bitcoin purchased exceeds the amount mined, the price will inevitably rise—and will continue to rise.
I can predict with almost absolute certainty that Bitcoin's price will be higher at the next halving in 2028 than it was at the 2024 halving. The 2024 halving price was $63,900, and I believe the next one will at least double that, and possibly even approach $200,000. I also believe—and I'm stating this publicly—that we will see Bitcoin reach a new all-time high for the second time before the next halving.
The next halving will occur 210,000 blocks after the last halving, so it could be in early April or mid-March. We'll get a clearer picture of the exact date as time goes on. You know, it depends on whether mining speed increases or decreases. However, if it's in mid-March, I expect we'll see a new all-time high in 2027—not 2026.
Bonnie: How will the election affect this process?
Michael Terpin:
Elections are part of the macroeconomic environment, right? Interestingly, I don't think it's a coincidence that Satoshi Nakamoto chose to perform the Bitcoin halving in a US election year. So far, every halving has occurred in a US presidential election year: 2012, 2016, 2020, 2024, and the next one will be in 2028.
If we push the timeline forward, even by just one month each time, the halving will eventually break this pattern in the next 3 to 4 cycles. It could happen as early as early February, before even the first primary has begun. Therefore, we can observe how this timeline will affect the market.
Typically, Bitcoin bear markets occur during midterm elections. Unfortunately, cryptocurrency support has become more partisan. In the past, cryptocurrency support was bipartisan, but now it's more of a partisan affair.
The “Stand With Crypto” campaign actually performed exceptionally well in the last election—the crypto industry became the largest source of political donations, even surpassing the combined donations from major banks and the pharmaceutical industry, something unimaginable four years ago. However, with the majority of donations flowing to candidates who support cryptocurrency, Kamala Harris's stance has been quite ambiguous. Her position is more about identity politics than emphasizing the positive economic role of cryptocurrency.
One of the Democrats' midterm election strategies is now targeting Trump, claiming he has profited from cryptocurrency assets and that his family is also profiting from this emerging asset class. The Democrats have even stated that they will not vote on any legislative proposals for the Clarity Act unless Trump first addresses his family's cryptocurrency holdings. In other words, they are using the Clarity Act as a political bargaining chip to achieve their electoral goals.
Currently, mainstream opinion holds that the Democratic Party has a 75% to 80% chance of winning the midterm elections. If they do win, it could very well mean that cryptocurrency legislation in the United States will stall for the next two years. This is because in the US, the House of Representatives is responsible for introducing new legislation, and the Democrats are unlikely to push through any bills supporting cryptocurrencies, and may even attempt to pass policies detrimental to the crypto industry.
A proposal known as the "compromise act" was actually spearheaded by a lobbying group of banks. This bill includes provisions such as: declaring decentralized finance (DeFi) illegal, restricting participation to only broker dealers; prohibiting self-custody by individual investors, requiring them to hold crypto assets in custodial accounts at traditional financial institutions; and banning stablecoins from offering interest or any form of reward, in order to prevent threats to banking operations.
This legislation is worse than the current situation. This is why Coinbase CEO Brian Armstrong publicly stated, "I cannot support such a bill." He believes that such regulations are worse than having no new legislation at all.
This is why, if you are a cryptocurrency supporter and voter in the United States, regardless of who your local candidate is, you should actively participate in the vote. You need to support candidates who truly support the development of cryptocurrency and cast your "red button"—now known as the "orange button."
Bitcoin Supercycle (peak in 2028)
Bonnie: We just talked about the next high. I'd like you to break it down into a bull case, a bear case, and a base case.
Michael Terpin:
Of course. Bullish, bearish, and baseline scenario predictions largely depend on whether we experience a "supply shock" in 2029. In other words, 2029 will be the starting point for the next bull market—the year after the halving. A supply shock refers to a situation where, literally, there is "no Bitcoin left to sell" in the market.
The only major supply shock in history occurred in October 2013. There were many reports at the time, and I found it to be true myself: you simply couldn't buy Bitcoin. If you wanted to buy a large amount of Bitcoin then, exchanges like Coinbase simply didn't have enough stock. They would tell you, "Oh, our system is down," or "We're temporarily out of stock." The rumor was that exchanges simply didn't have any Bitcoin to sell. At that time, the demand to "buy Bitcoin" far exceeded the supply to "sell Bitcoin."
A similar situation could occur again at some point in the future. Historically, the amount of Bitcoin in circulation on exchanges has typically been low, especially during bull markets.
Bonnie: My prediction for the next halving price range is: worst-case scenario is $120,000, best-case scenario is $200,000. If you look at historical "diminishing returns" patterns, the first bull market saw a 100x increase; the next one was 30x; the following one was 10x, but it actually was 8x; then it should have been 3x, but it was 2x. So I think the next step in this sequence could be a 30% to 50% increase above the halving price. That is, in the worst-case scenario, Bitcoin could rise to $180,000, while in the most optimistic scenario it could reach $400,000—and this doesn't even take into account the supercycle. Could you share a specific timeline?
Michael Terpin:
The timeline still follows Bitcoin's "four-season cycle." Bitcoin's "spring" will likely begin around March 2028. The "summer" typically lasts four to seven months, but recent cycles suggest this period may be longer. This means we could see Bitcoin break its all-time high in October or November 2028, which is late Q3 or early Q4.
However, we may very well reach a new all-time high before the halving. Even the day before the halving, this high would be considered a new record.
Halvings typically push Bitcoin's price towards its so-called "fair market price." For example, after the last halving, Bitcoin's price surged to $73,000 but later fell back to a level closer to its fair market price. If the fair market price for the next halving is $150,000, then even if the price rises to $180,000 after the halving, it may retrace to around $150,000. Assuming the price doubles from $150,000, that's $300,000; if it only increases by 50%, that's $225,000.
The “supercycle effect” typically begins to manifest itself during Bitcoin’s “summer.” When Bitcoin’s price approaches the all-time high of the previous bull market, say, the halving price is $150,000 and the previous high was $170,000, then Bitcoin may reach $170,000 in May or June 2028.
After that, it typically takes 9 to 11 months for the market to experience a bubble burst. This also involves the formation of a bottom price and the pattern observed in Bitcoin's historical 35-month cycles. Each cycle has two possible outcomes, but they are mutually exclusive, so we need to observe the data to determine the most likely scenario.
Bitcoin's "summer" is often a time of bubble bursting, and also a time of frenzied influx of retail investors. They'll say, "Wow, Bitcoin's going to reach $1 million! I have to buy right now!" But in reality, Bitcoin might only rise to $400,000 before the bubble bursts, and the price halve to $200,000. Retail investors often buy at the peak and sell at the bottom.
As for supply shocks, it's similar to the situation in October 2013: there isn't enough Bitcoin available for sale in the market. Back then, buyers tried to purchase Bitcoin from whales, but the whales would raise prices and refuse to sell at lower prices. In this scenario, the market might experience a "god candle," where the price of Bitcoin surges dramatically in a short period. For example, the price of Bitcoin could jump from $300,000 to $400,000 within a week. This rapid rise attracts a large number of retail investors, further driving up the price.
The core of a supercycle is that "once prices reach a peak, it's very difficult for them to turn back." If Bitcoin's price reaches $480,000 in this cycle, then the expectation of rising to $1,000,000 in the next cycle becomes more realistic; but if the price only reaches $200,000, the situation is completely different.
If you've heard that widely circulated FUD story—which is even considered one of the reasons Bitcoin's price surged to $60,000—it's about someone saying Jeffrey Epstein bought Coinbase stock, and then he's being claimed to be Satoshi Nakamoto.
Just because he donated $500,000 to MIT, and a portion of that money went to MIT's Digital Currency Lab—which did indeed pay Gavin Andresen's salary—doesn't mean Epstein is Satoshi Nakamoto. After all, these events occurred five or six years after Bitcoin's inception.
Furthermore, according to newly disclosed documents, Epstein's exposure to Bitcoin likely occurred around 2011 or 2012. So how could he have only come into contact with Bitcoin years after the Bitcoin white paper was published, yet be considered Satoshi Nakamoto? There is absolutely no evidence to support this claim. However, I'm certain this rumor is deliberately spread by short who might call the media and say, "Hey, did you know? Epstein is Satoshi Nakamoto!"
Bonnie: I haven't asked this question in a long time, but why doesn't anyone ask who Satoshi Nakamoto is? Who is he, who is she, or who are they?
Michael Terpin:
Everyone's been asking this, but we still don't have a definitive answer. I also want to know who Satoshi Nakamoto is. But frankly, I'm probably glad I don't know. Because if Nakamoto's identity were revealed, he (or they) could be arrested on some unfounded charges. You know, the US government might say, "Oh, you've created a tool for money laundering; we need to hold congressional hearings to investigate." So, in a way, the lack of concrete evidence is a form of protection.
For example, Craig Wright once claimed to be Satoshi Nakamoto, but since he is not a U.S. citizen, he cannot be directly prosecuted in the United States. However, this does not mean he will not face legal action elsewhere. His claims were rejected by the courts, which ruled that he is not Satoshi Nakamoto. However, this does not completely deny his role in the early development of Bitcoin. There is indeed some evidence suggesting that he may have participated in the early mining of Bitcoin and may have been a member of the "Satoshi Nakamoto" team.
Interestingly, Martti Malmi recently released his email correspondence with Satoshi Nakamoto a year or two ago. At the time, Malmi was a 19-year-old university student. After seeing Nakamoto's white paper and noticing an email address on it, he contacted Nakamoto. In his email, he wrote, "Hi, I'm a university student. Is there anything I can do to help? Like, maybe help you build a website?" Nakamoto accepted his help, and Malmi subsequently assisted in creating bitcoin.org (the official Bitcoin website) and Bitcoin Talk (a Bitcoin forum), receiving Bitcoin as payment.
But Satoshi Nakamoto also told him, "The first thing you can do is turn on your computer and start mining. That way, at least two people are mining at any given time." If Satoshi Nakamoto wasn't intentionally trying to mislead people into thinking he was a single person, then this statement seems to indicate that Satoshi Nakamoto was indeed a single person.
Looking at all of Satoshi Nakamoto's written works, his tone and writing style are remarkably consistent, further supporting the idea that he is the same person. However, Satoshi Nakamoto's identity remains a mystery. Some speculate he might be Adam Back, and an HBO documentary even claimed Peter Todd was Satoshi Nakamoto. But I think this is completely impossible. That documentary's conclusion was based solely on a single statement Peter Todd made, made a citation error, and mentioned things he did before joining the Bitcoin community—this is utter nonsense.
Bonnie: I'm guessing you have a large investment in Bitcoin. I've spoken with some institutions, and they mentioned that even a small probability of the risks associated with quantum computing or the "who is Satoshi Nakamoto" issue would make them very cautious and hesitant to invest more. But you don't seem to think so?
Michael Terpin:
I believe the risk of quantum mechanics is extremely low for several reasons.
First, there are current technological limitations in quantum computing. Currently, the world's most advanced quantum computers have only about 100 qubits. However, research indicates that cracking a Bitcoin wallet address requires at least 20,000 qubits of computing power. The gap is enormous.
Why don't they attack banks? In a centralized system, they can steal more money, draining it piece by piece. They would target JP Morgan first, not Satoshi Nakamoto.
If a country like North Korea wanted to use quantum computing to crack Bitcoin, where would they get the necessary hardware? Quantum computing is not just a software problem; it requires extremely advanced hardware. This hardware is subject to strict export controls, and only top technology companies like Google and IBM have the capability to develop such devices. I don't believe these companies would abuse their technology to steal Bitcoin.
Second, we have enough time to deal with this threat.
A technological breakthrough in quantum computing is unlikely to occur in the short term. At the current rate of technological development, quantum computers may take 5 to 20 years to reach a level capable of cracking Bitcoin wallets. Even taking the middle value of 10 years, that's enough time for the crypto industry to develop appropriate defenses. In fact, many teams are already researching quantum-secure wallets and quantum-secure forks.
If a quantum-safe fork does occur in the future, old wallets that have lost their private keys may become vulnerable and at risk of being hacked.
But I don't think this is the end of the world. We currently believe the total supply of Bitcoin is 21 million, but only about 16 million are actually available; the rest are unusable due to lost private keys. If those old wallets' Bitcoins re-enter the market, it will actually bring the Bitcoin supply closer to its theoretical limit.
Bonnie: Don't you think this could be the worst-case scenario?
Michael Terpin:
I don't think so. In fact, this could be an opportunity. If someone does manage to crack Satoshi Nakamoto's wallet and sell Bitcoin at $50, I would buy more without hesitation. This would mean the market has absorbed the potential risk, and the price is likely to continue rising in the future.
The probability of the risks associated with quantum computing occurring is extremely low. Even if it does happen, I believe it will only be a short-lived market bluff and will not fundamentally affect the long-term value of Bitcoin.
Typically, investors either trade themselves or entrust their funds to professional fund management companies. Our fund is algorithm-based. Although I am the Chief Investment Officer, I have a dedicated team of algorithm developers and traders. We develop strategies based on market volatility, taking action when price fluctuations exceed 5% or key resistance levels are broken.
As for the larger market trend, our goal is to buy at market lows and sell at market highs whenever possible.
I believe the crypto industry will find effective solutions to the potential threats posed by quantum computing, especially to Satoshi Nakamoto's wallet. Again, companies with quantum computing capabilities, such as Google and IBM, are unlikely to abuse their technology to attack the Bitcoin network. Countries like North Korea, on the other hand, lack both the necessary technological support and access to tightly controlled quantum computing hardware.
Even if quantum computing technology were to be used to attack the Bitcoin network, attackers would be more likely to target centralized systems such as banks. If the banking system were attacked, for example, if billions of dollars were suddenly withdrawn from accounts of JP Morgan or Bank of America, the Federal Reserve might intervene to bail out the market, which would only further exacerbate the instability of the global financial system.
Therefore, I am not worried about the risks of quantum computing. If the price of Bitcoin were to plummet to $50 due to such risks, I would not hesitate to buy more.
Bitcoin, AI, precious metals? Which is the new darling?
Bonnie: Do you still think Bitcoin is a very new asset class? Are people still interested in it? AI seems to be the new hot topic right now, right?
Michael Terpin:
AI is not an asset class; it is a technology. An asset class refers to investment vehicles like AI company equities, which are a subclass of the broader asset class of stocks.
Of course, AI is one of the most talked-about emerging technologies in the market today, but the market cycle of Bitcoin and the development cycle of AI are completely different. I have indeed heard some concerns about AI, with some believing that it might trigger the next global economic crisis. Many people share this fear.
However, for now, the market seems to be in a "paradise" state. Almost all assets are hitting all-time highs. I myself have invested in some AI projects, although my main investment area is still cryptocurrency, while I also have some real estate investments.
Interestingly, a friend of mine participated in Anthropic's funding round a few years ago, probably Series C or D, at a valuation of around $400 million. He invited me to invest as well, but I asked a few questions, such as, "Do they have revenue?" The answer was not much; "Are they profitable, or are they burning through cash?" The answer was the latter. So I decided not to invest because I felt a $400 million valuation was too high. As a seed-stage investor, I'm not used to accepting such a high valuation.
Bonnie: That would be a 1,000x return! Their latest valuation seems to have exceeded $400 billion.
Michael Terpin:
This number is absolutely insane. What we need to see now is whether this growth can be sustained when people are investing at valuations of $400 billion, and whether these companies can truly grow into trillion-dollar enterprises.
There's a very obvious problem in the market right now: because the recent returns in the AI field have been so extraordinary, many retail investors are starting to think, "Why should I buy Bitcoin? Why not invest in AI instead?"
Bonnie: That's true. Another popular asset class is precious metals. The problem is that retail investors always like to chase the highs in all these asset classes, and often end up getting hurt by the market. They'll buy gold with leverage when it reaches $5,500, only to suffer heavy losses when the price pulls back.
Michael Terpin:
Gold and silver have always been attractive asset classes. In my book, I mentioned the CME's (Chicago Mercantile Exchange) definition of a "supercycle": a supercycle occurs when the nature of a commodity undergoes a fundamental change that lasts for at least five years. The CME states that there have only been two supercycles in the commodity markets over the past 100 years.
The first instance was in the 1970s when Nixon announced the United States' withdrawal from the gold standard, simultaneously allowing Americans to purchase gold again after 40 years. Suddenly, investing in gold became a completely new concept, and a new wave of gold buyers emerged. In less than a decade, the price of gold quadrupled.
The second supercycle occurred in the 1990s, when China began purchasing large quantities of various commodities due to rapid industrial expansion. This led to a surge in the prices of industrial metals such as nickel and copper. Although the price increases for gold and silver were not as significant as for other industrial commodities, the overall commodity market experienced a major rally.
CME also points out that while it's difficult to draw conclusions during the COVID period, we may be entering the third supercycle. Potential drivers of this supercycle include the continued expansion of global fiat currency debt and investor concerns about "monetary debasement trades."
If I had read my book more carefully back then, perhaps I would have bought more gold when it was published. Clearly, gold was a very good investment option in 2024. Last year (2025), many people were discussing "currency devaluation trading" and listed Bitcoin as one of the assets worth investing in. However, many were disappointed with Bitcoin's performance because other assets outperformed it.
This is because they didn't pay attention to Bitcoin cycles, right? You shouldn't buy at the top of a cycle, but at the bottom. There's a classic cartoon from the last Bitcoin cycle: there are two tables, one with a sign that says "Bitcoin for Sale: $60,000," and people are lining up; the other table has a sign that says "Bitcoin on Sale: $15,000," but nobody is there.
Why is this happening? The answer is simple: fear and greed. When Bitcoin recently reached $60,000, the market's fear level even surpassed that during the FTX crash. You need to remember that four years ago, $60,000 was considered a symbol of a bull market. "My God, $60,000! Bitcoin is going to the moon!"
However, four years later, market expectations for Bitcoin have become so high that people are panicking when the price reaches $60,000 again.
There's a saying: "If in doubt, zoom out." In the long run, if you buy Bitcoin at any point in time and hold it for five years before selling, you only have a 1% chance of losing money. And even if you unfortunately fall into that 1% chance, there's no need to sell at a loss. If you focus on buying during bear markets, Bitcoin becomes a more reliable investment.
American Politics and Insiders
Michael Terpin:
In Bitcoin's first two halving cycles, price increases largely followed theoretical predictions: approximately 100 times for the first and 30 times for the second. For the 2020-2021 bull market, I predicted an increase of about 10 times, while also considering potential fluctuations due to the macroeconomic environment. However, the macroeconomic environment at that time was very unfavorable for cryptocurrencies. The Biden administration's generally unfriendly attitude towards cryptocurrencies, coupled with the regulatory stances of figures like Gary Gensler and Elizabeth Warren, further heightened market tensions. Furthermore, rapidly rising interest rates dampened risk-on investment behavior.
During the Trump administration, many hoped to push through the Clarity Act. In contrast, the Genius Act had less influence—while important, it didn't truly affect institutions' ability to recommend digital assets (especially Bitcoin) to clients. However, the Clarity Act didn't pass at the time. Now, the bill has become a "political football" in the midterm elections, and I think it's highly unlikely to pass unless the Senate forces its way through with a 51-49 vote.
Against this macroeconomic backdrop, we've seen Trump frequently discuss tariff policies on Twitter, causing significant market volatility. This explains the sharp drop in traditional markets on Liberation Day. However, traditional markets recovered more quickly, with the S&P 500 even reaching a new all-time high. Cryptocurrencies, as a relatively new asset class, are more sensitive to news and therefore experience even greater volatility.
As for the 10/10 (1010) tweet, its main content was Trump's threat to impose a 100% tariff on Chinese goods. Although many people know that Trump's statements are often just a negotiating tactic, this tweet still triggered a strong market reaction. Many articles analyze that this event appears to be "contrived" because the market reaction was too fast, as if the content of the tweet was known in advance.
For example, there were rumors that Morgan Stanley sent a memo to brokers minutes before the tweet, advising them to "sell Bitcoin and MicroStrategy stock." This was reported in some media outlets. Furthermore, unusual trading occurred on the Binance platform. Both Binance's proprietary funds and some large investors on the platform began large-scale selling immediately after the tweet was posted. These phenomena were not only widely reported but also appeared to be consistent with the facts.
Another noteworthy aspect is that this sell-off also involved market makers' "auto-deleveraging." Normally, market makers hold both long and short positions to hedge risk, but in this case, they suddenly became naked longs—pure long positions without any hedging. This has never happened before.
Why the bill is important to Bitcoin
Bonnie: You just talked about DeFi and stablecoins. So why is the Clarity Act also important for Bitcoin?
Michael Terpin:
The significance of the Clarity Act lies in providing a clear regulatory framework for the entire cryptocurrency industry, not just stablecoins. Its core objective is to clarify the rules, telling the market exactly what is legal and what is illegal.
For example, during the previous US administration, SEC Chairman Gary Gensler stated that Ethereum was a security. While this statement never officially took effect, it sparked widespread concern. David Sacks previously categorized crypto assets into three types: commodities, securities, and collectibles. Collectibles, such as Trump Coin or Meme Coin, do not require regulation. However, Gensler's position is that, apart from Bitcoin, almost all crypto assets should be considered securities.
This ambiguous regulatory stance has led to market confusion. For example, investment firms like Morgan Stanley manage trillions of dollars in client funds, but they don't know how to recommend crypto assets like Ethereum to their clients. This is because if Ethereum is classified as a security, clients without "accredited investor" status could face legal risks. Therefore, the significance of the Clarity Act lies in clarifying these rules and eliminating uncertainty.
Currently, both Atkins, the chairman of the U.S. Securities and Exchange Commission (SEC), and a new head of the Commodity Futures Trading Commission (CFTC) are considered pro-cryptocurrency. Their stance is relatively reasonable, arguing that only assets meeting the definition of a security should be classified as such. The definition of a security hinges on a standard called the Howey Test, which dates back to the 1940s but remains ambiguous in many respects.
Simply put, securities are assets, such as stocks, through which investors can receive dividends, while also relying on statements or forecasts released by the company. To better illustrate this concept, I'll use the analogy of "gold bars" and "gold mining stocks." The price of gold bars is entirely determined by market supply and demand; no individual or institution can control its price. Bitcoin and most altcoins, like gold bars, are commodities. The value of gold mining stocks, on the other hand, depends on the company's predictions about the future. For example, if a company claims to have discovered new gold resources, such forward-looking statements can influence investors' decisions. If such statements are false, the company is legally liable.
Bitcoin is more like a "gold bar" than a "gold mining stock." If I say "Bitcoin will rise to $400,000" but it doesn't reach that price, no one will sue me because that's just my market opinion, not investment advice.
Bonnie: You launched a "Bitcoin super cycle" hedge fund and outperformed Bitcoin by 2.5% in the first month. How did you do that?
Michael Terpin:
We primarily use the strategies I mentioned in the book. What frustrates me is that when I recommend people buy Bitcoin, they often don't want to open a Coinbase account and instead ask me, "Is there a stock I can buy directly?" Indeed, there are Bitcoin ETFs on the market, but if you want to outperform Bitcoin's price performance, you need to find a good fund manager.
I've researched existing Bitcoin funds and found that almost none have been able to focus solely on Bitcoin and outperform its price performance. The most well-known funds had returns of approximately 47% to 52% in 2024. If you're a traditional stock market investor, such returns...
