The Schumpeterian Bitcoin Cycle

The Road Ahead

with Andrew Edstrom

Bitcoin embodies Schumpeterian Creative Destruction. Bitcoin also behaves like a physical natural resource, with unique differences that make it a driving force for effecting fundamental change, much like gold, oil or electricity has done.

Bitcoin goes through periodic cycles of varying lengths that inspire a creative rejuvenation of its ecosystem with new ideas and innovations at various timescales and magnitudes.

We apply the idea of a Schumpeterian Business Cycle to Bitcoin and construct a Schumpeterian Bitcoin Cycle based on three componential waves: a multi-decadal Bitcoin Kondratieff Cycle; a Bitcoin Juglar Cycle that is shorter than a decade and a Bitcoin Kitchin Cycle that corresponds with the halvings.

Associated with these sub-cycles are three ratios that capture their logic: Stock-to-Flow (S2F*), Installed Capacity-to-Capital Investment (IC2CI)…