diff --git a/reader.c b/reader.c
index 5d821d5..50f4e81 100644
--- a/reader.c
+++ b/reader.c
@@ -30,7 +30,7 @@ static value_t read_struct(reader_state_t *state);
 static value_t read_weak_box(reader_state_t *state);
 
 static value_t read_definition(reader_state_t *state);
-static value_t read_backref(reader_state_t *state);
+static value_t read_placeholder(reader_state_t *state);
 
 static void next_char(reader_state_t *state);
 static void skip_whitespace(reader_state_t *state);
@@ -38,7 +38,7 @@ static void skip_whitespace(reader_state_t *state);
 static bool    is_placeholder(reader_state_t *state, value_t value);
 static value_t get_placeholder(reader_state_t *state, fixnum_t ref);
 static void    set_placeholder(reader_state_t *state, value_t place, value_t value);
-static value_t finalize_placeholder(reader_state_t *state, value_t place);
+static void    finalize_placeholders(reader_state_t *state);
 static value_t patch_placeholders(reader_state_t *state, value_t v);
 
 static void tree_replace(value_t *in, value_t oldval, value_t newval);
@@ -144,7 +144,7 @@ static value_t read_special(reader_state_t *state)
   case '0' ... '9':
     return read_definition(state);
   case '=':
-    return read_backref(state);
+    return read_placeholder(state);
   default:
     release_assert(NOTREACHED("Invalid character in special value."));
     return UNDEFINED;
@@ -493,14 +493,13 @@ static value_t read_definition(reader_state_t *state)
 
   register_gc_root(&place_root, get_placeholder(state, ref));
   v = read_one_value(state);
-  release_assert(!is_placeholder(state, v));
   set_placeholder(state, place_root.value, v);
   unregister_gc_root(&place_root);
 
   return v;
 }
 
-static value_t read_backref(reader_state_t *state)
+static value_t read_placeholder(reader_state_t *state)
 {
   next_char(state);
   skip_whitespace(state);
@@ -552,25 +551,36 @@ static void set_placeholder(reader_state_t *state, value_t place, value_t value)
   _CADR(place) = value;
 }
 
-static value_t finalize_placeholder(reader_state_t *state, value_t place)
+static void finalize_placeholders(reader_state_t *state)
 {
-  assert(is_placeholder(state, place));
-
-  if (is_placeholder(state, _CADR(place)))
+  for (bool changed = true; changed; changed = false)
   {
-    value_t other_place = _CADR(place);
-    _CADR(place) = UNDEFINED;
-    _CADR(place) = finalize_placeholder(state, other_place);
+    /* On each cycle, placeholder cycles/lists should come one link closer to self or actual value.
+     * Self-links indicate cycles and are replaced with UNDEFINED.
+     * We're done when no placeholders link to other placeholders. */
+    for (value_t item = state->ref_alist.value; !is_nil(item); item = _CDDR(item))
+    {
+      if (_CADR(item) == item)
+      {
+        _CADR(item) = UNDEFINED;
+        changed = true;
+      }
+      else if (is_placeholder(state, _CADR(item)))
+      {
+        _CADR(item) = _CADR(_CADR(item));
+        changed = true;
+      }
+    }
   }
-
-  return _CADR(place);
 }
 
 static value_t patch_placeholders(reader_state_t *state, value_t v)
 {
+  finalize_placeholders(state);
+
   for (value_t item = state->ref_alist.value; !is_nil(item); item = _CDDR(item))
   {
-    tree_replace(&v, item, finalize_placeholder(state, item));
+    tree_replace(&v, item, _CADR(item));
   }
 
   return v;