Bitcoin Accumulation Strategy

Why right now is the best time to increase allocation to your Bitcoin position.

Bitcoin offers us a truly sovereign way to store the earnings we work hard for, to protect our monetary savings from theft by inflation, or outright confiscation. I don’t know about you, but I’d rather save the money I work hard for in a form that can’t just be printed by politicans at will, resulting in the devaluing of my savings.

For those that have come to understand the true future power possessing Bitcoin will provide them, accumulating Bitcoin - however much each individual can afford - often becomes a priority. So is there a way for us to optimise our accumulation?

With the Bitcoin halving fast approaching and a likely Bitcoin price that at it’s peak will top around USD 150,000 this cycle, I want to outline the Bitcoin accumulation strategy I use in hopes that you may gain additional perspective and clarity on what lies ahead, both in the current cycle and subsequent ones.

Below you’ll find a graphic of my Bitcoin accumulation strategy used through the last cycle and currently being executed in this four year cycle. This cycle refers to the price pattern Bitcoin has established around the halving - where Bitcoin block rewards (inflation) is halved every four years - and its resultant price fluctuations and trend.

We are only eleven months away from the next halving event. Once the halving occurs, the supply shock of only half the amount of new Bitcoin being mined each block in face of no demand change (or more likely, increasing), means the price of Bitcoin starts to rise rapidly. As Jesse Meyers explains in his piece below, instead of the current production of (around) $900M per month of Bitcoin, this supply will halve to $450M (assuming constant price). If demand for Bitcoin stays at the same level, the price has to rise to satisfy that same demand. If demand for Bitcoin increases which it likely will as we see more banks collapse and governments continue their idiotic policies, the effect on price will be even more profound.

Bitcoin's halving is less than a year away - how high will the price go?

Trade It? No.

I do not actively trade Bitcoin, but I do maximise the amount of Bitcoin I accumulate in my portfolio by increasing allocation in specific time windows. It is up to the individual investor if they decide to lighten their exposure after the inevitable peak.

For clarity, I have multiple ‘stacks’ of Bitcoin. Some is accumulated and kept in cold storage, destined for generational wealth. Other Bitcoin I accumulate for a shorter term nature as a personal savings mechanism, and also as part of a wider portfolio strategy which rotates between assets depending on their value proposition at any given time.

I mention this before moving on because only having one allocation stack to Bitcoin can lead to danger which I’ll discuss later.

When to Allocate

There are certain times over others that its more beneficial to allocate harder into Bitcoin. The halving provides us a good guide as to when these periods are.

The diagram below illustrates the general price dynamic Bitcoin has exhibited during the first two halvings of its life. The current third halving period is proving to be of a similar trajectory.

Clearly we want to accumulate when the price is low. For some with a more active strategy, they will also want to lighten nearer to the peak. Is it possible to time it perfectly? Doubtful. I’m not a trader, but a generalist and allocate in broader trends and time horizons. Would it be great to accumulate cash and pile in at the low point indicated above? Of course, but many try each cycle and 99.9% fail. Bitcoin is no different than any other asset, so Dollar Cost Averaging applies and stands you in good stead. Trying to trade in and out completely, missing the turn around and the best ten days of a new bull run can severely impact your ROI.

For this reason we cover ourselves either side of the ‘Fast Accumulation’ stage with slow accumulation. We’ll pay too much either side, and we won’t buy enough when it’s at its lowest. Make your peace with it.

This model can be salted to taste. Each investor has different objectives, criteria and different portfolio composition. It may not suit your investment goals to accumulate Bitcoin in three out of every four years as outlined in this model. But hopefully you can use the idea presented as a way to optimise when and to what extent you buy.

It Works Until it Doesn’t

While this model has worked for the last two halvings, to be clear - one day this strategy will break. Fortunately, when it does, it will break to the upside. At some point in time, which with current global problems looks increasingly as it may be sooner than later, Bitcoin will reach ‘escape velocity.’ When a large enough proportion of the world realises fiat money is broken and hyperinflation from government printing takes grip over ever increasing swaths of the world including the US and EUSSR, Bitcoin will run MUCH higher than expected and won’t retrace as hard. Once people truly lose confidence in the system, they will look for the exits from the CBDC hellscape that is planned.

I am not expecting escape velocity to be reached this cycle. If forced to hazard a guess, I believe it will be in the following cycle, around 2029. Governments can continue papering over their problems for a few more years yet before the wheels really fall off. Covid proved the masses still believe and do what their governments tell them, but this is slowly changing as exhibited by the increasingly desperate attempts by bureaucrats to expand their control over the system and its exits.

Once we hit a tipping point in society, escape velocity of Bitcoin will be reached and the price trajectory after the halving will continue much higher, to a more lofty fiat value than most of us expect or believe possible. A Bitcoin price measured in the millions instead of thousands. This is why earlier I enunciated the differentiation in my Bitcoin stacks. Be prepared for every eventuality. Nothing would be more devestating for someone who truly understands the problems we face and the solution Bitcoin provides, than to be caught out trying to be cute by selling high and intending to buy back lower, only to find it doesn’t come back down. One day this will happen.

Conclusion

I am strong believer that fiat currency is doomed. Money that can be printed at will by inept government leaders has and always will fail, its only a matter of time frame. Those with only fiat savings, or no savings at all will be subject to the dictate of government and whatever handouts they deem fit to provide you with from other people’s money, or your own.

People with hard assets like businesses that can pass on inflation, land that benefits from scarcity and commodities that also rise in high inflationary times will see their purchasing power maintained or increased.

Bitcoin will also protect and increase your purchasing power. Storing your savings and wealth in an immutable and unconfiscatable hard money also carries less risk than many alternatives. With equities or business, lots of things can go wrong with execution, the wider economy, technological obsolesence or management error. With land and property, you are subject to the whims and dictates of increasingly socialist governments, not to mention the leverage in this asset class that could cause disaster.

Bitcoin is not subject to any centralised authority and as a truly sovereign money will come to consume more of the world’s transactions and wealth storage thanks to its advantages too numerous to mention in this piece, but I discuss here.

Bitcoin as the future money of the world will come to encompass all human effort and value production. We just don’t know the time frame. Governments will resist this as long as possible as it works against the system of control.

For all these reasons, I have my ‘cold stack’ which is ready for such an outcome. In the mean time, I’m not delusional and know for the moment at least, we still live in a fiat based world where the items we buy and the assets we desire - whether it be lifestyle or other investment opportunities - are still priced in dollars, euros and yen.

This current point in time, in the lead up to the halving and a likely 4-6x in price, Bitcoin offers us arguably the highest risk vs reward investment opportunity available, and so my allocation increases accordingly. After the halving in eleven months when we will see the price rise more rapidly, the time to temper purchasing and re-commence allocation to other asset classes will again take priority.

Importantly this strategy can be used by investors with differing goals and intentions. Some may use it to trade, others will optimise entry for larger exposure, more yet may simply use it as a signal when to stop buying for a period when the price is overheating. The Mayer Multiple is also of use in this regard.

The current banking collapse and worldwide geopolitical events I discuss each week only solidifies the ultimate inevitability that Bitcoin offers man a solution to his many problems. Accumulating the most you can is in the best interests of you and those you care about.