Abstract

Bitcoin’s money supply algorithm was programmed so that the number of new bitcoins generated decreases geometrically, with a 50% reduction approximately every four years. Because Bitcoin’s money supply algorithm is static and longterm deflationary, BTC is volatile and Bitcoin failed as a payment system. However, because it is long-term deflationary, BTC is arguably a good, albeit volatile, long-term store of value, and can act as an effective, but unregulated, diversifier within a portfolio. Thus far, contrary to expectations vis-à-vis market efficiency, after each Bitcoin halving event the price of BTC has tended to increase for about a year, before decreasing. This observation motivated the creation of Seasonal Tokens. The four tokens—Spring, Summer, Autumn and Winter—each in turn have their money supply halved every three years, with one token halving every nine months. Thus far, again in apparent contradiction to the efficientmarket hypothesis, the relative price of a token has started to increase three weeks before its halving, and continued to increase linearly for another four months.

Keywords: Seasonal tokens, Cryptocurrency, Bitcoin, Halving