Both the (4th) Rainbow Chart and Power Law chart failed this week. Only the Diminishing Returns theory has survived every cycle.

As of this week, both the Bitcoin Power Law chart and the Bitcoin Rainbow chart (now on its 5th version) have broken through the bottom. Both of them have always grossly overestimated BTC price and underestimated the diminishing returns of each cycle.

Bitcoin cycles have diminishing returns

• Cycle 2: 50x gain
• Cycle 3: 20x gain
• Cycle 4: 3x gain
• Cycle 5 (just ended): 2x gain (1.7x inflation-adjusted)

Returns converted to 4-year CAGR:

• Cycle 2: 170%
• Cycle 3: 110%
• Cycle 4: 32%
• Cycle 5 (just ended): 19% (14% inflation-adjusted)

The current Cycle 6 will likely only have 1.4x to 1.6x, which is roughly 9-12% CAGR. Beyond that, BTC price returns are no better than S&P 500 returns, but with much more risk.

Within a couple of cycles, not only will the S&P 500 have less risk than holding BTC, but the S&P 500 will also have higher returns than holding BTC. A lot of crypto investors are going to leave. So if you think THIS bear market sucks, good luck surviving the next 2 cycles. It's going to be worse.

Saylor designed STRC expecting 30% CAGR for Bitcoin. I hope he's ready for far, far lower returns.

(There is one silver-lining: This diminishing returns analysis is based on cycle highs. The cycle lows for this cycle are still around 30% CAGR as of the start of June 2026, but that's likely because the cycle isn't over yet and we haven't hit the bottom. If BTC falls to $30-40k before the end of this cycle, then the returns will be just as bad as the cycle high predictions.)