'The Supercycle': The Theory That Justified Everything
In 2021 big investors said bitcoin's boom-and-bust cycle was over. Then it fell 78%. In 2025 it peaked again, on schedule, and fell 54%.
Key numbers
-78%
Bitcoin fall, 2021-22
$126,200
Bitcoin peak, Oct 2025
-54%
Fall to Jul 2026 low
~$82,000
Bitcoin, 16 Oct 2026
On 27 May 2022, Su Zhu, co-founder of the Singapore hedge fund Three Arrows Capital, posted a short admission on Twitter: his "supercycle price thesis was regrettably wrong". Bitcoin had fallen from $69,000 to under $30,000 in six months. Within a month his fund, which had managed around $10 billion, was being liquidated by a court in the British Virgin Islands, owing creditors more than $3 billion.
The supercycle was the idea that crypto had grown up. Until 2021, bitcoin had moved in a rough four-year rhythm: a huge rally, a crash of 80% or more, a long sulk, then another rally. The supercycle crowd said that rhythm was over. Big companies, pension funds and governments were arriving, and they would buy every dip. There would be corrections, but never again a crash that wiped out four-fifths of the price.
Why the cycle existed
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The four-year rhythm has a mechanical root. Bitcoin is created as a reward to "miners", the companies that run the computers keeping its ledger. Roughly every four years the reward is cut in half by the software, an event called the halving. It happened in 2012, 2016, 2020 and 2024. Fewer new coins reach the market, much like a company sharply cutting its share issuance. In each cycle so far, the price peaked 12 to 18 months after the halving and then collapsed: December 2013, December 2017, November 2021 and October 2025.
The 2021 case
In 2021 the evidence for a new era looked strong. MicroStrategy, a Virginia software company run by Michael Saylor, was turning its whole balance sheet into bitcoin. Tesla bought $1.5 billion of it. El Salvador made bitcoin legal tender, meaning shops had to accept it like the dollar. PayPal, Visa and Mastercard added crypto features. Su Zhu was the theory's loudest voice, and in a February 2021 podcast he suggested bitcoin could one day reach $2.5 million.
Three Arrows did not just talk about it. It borrowed heavily from crypto lenders such as Genesis, Voyager and BlockFi to bet on prices rising. Borrowing to buy is leverage: it doubles gains and doubles losses, and a lender will demand its money back (a margin call) when the bet goes wrong.
The 2022 verdict
The bet went wrong. In May 2022 the Terra stablecoin UST, a token meant to stay at $1, collapsed and its sister coin LUNA went to almost zero, erasing about $40 billion. Three Arrows had a large LUNA position. It could not meet its margin calls, and its lenders went down with it. In November the exchange FTX collapsed. Bitcoin bottomed near $15,500 that month, 78% below its peak. It was a textbook four-year crash, as deep as 2018's.
Su Zhu was arrested at Singapore's Changi Airport on 29 September 2023 and jailed for four months for failing to cooperate with Teneo, the firm winding up the fund. It was a court order over the liquidation, not a fraud conviction. After his release he and his partner Kyle Davies went back to posting about the crypto market on social media, where the next bull run soon revived the supercycle talk.
The 2025 rerun
The second test was harder, because the institutions really did arrive. US regulators approved bitcoin funds that trade on the stock market like a share (spot ETFs) in January 2024, and billions flowed in. In March 2025 President Trump signed an order creating a US Strategic Bitcoin Reserve. Bitcoin hit a record of about $126,200 on 6 October 2025, according to Binance trading data.
Four days later the cycle turned again. On 10 October 2025, after Trump threatened 100% tariffs on Chinese goods, $19 billion of borrowed bets were forcibly closed in a day, according to CoinGlass. The slide ran into 2026. In June 2026 investors pulled a record $4.5 billion out of the bitcoin ETFs. On 1 July bitcoin touched about $57,800, a 54% fall from the peak.
The new buyers did not stop the fall. Some of them added to it. On 29 June 2026 Strategy, as MicroStrategy is now called, approved a programme to sell bitcoin, and within six weeks had sold 6,948 coins. The company that was supposed to buy every dip became a seller. By mid-October 2026 bitcoin traded around $82,000, still about a third below its peak.
The timing was almost exact. Halving in April 2024, peak 18 months later, crash after that: the four-year cycle the supercycle was meant to end ran on schedule twice. The participants changed. The pattern did not.
The aftermath
The supercycle has now failed twice. In 2021-22 bitcoin fell 78%, from about $69,000 to about $15,500, and Three Arrows Capital went into liquidation owing creditors more than $3 billion. Su Zhu was jailed in Singapore for four months from September 2023 for failing to cooperate with the liquidators. In 2025-26, despite spot ETFs, a US Strategic Bitcoin Reserve and corporate buyers, bitcoin fell 54% from its 6 October 2025 record of about $126,200 to about $57,800 on 1 July 2026. Strategy, the largest corporate holder, began selling bitcoin that summer. On 16 October 2026 bitcoin traded around $82,000. The four-year cycle tied to the halving has played out on schedule both times.
What this teaches
- The most expensive words in investing are still 'this time is different'.
- Big buyers do not end crashes. ETF holders and listed companies can sell too, and in 2026 they did.
- A theory that justifies borrowing more is the one to check twice. Three Arrows bet borrowed money on the supercycle and took its lenders down with it.
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