Lyn Alden: Bitcoin’s four-year cycle is evolving, retail participation remains muted, and integration into finance is crucial for global adoption

Key takeaways

• The traditional four-year Bitcoin cycle is evolving, with cycles still present but not as predictable.
• Bitcoin’s muted performance is largely due to the lack of retail participation, despite institutional access.
• The current bear market could be shorter than expected, potentially impacting investment strategies.
• Long-term Bitcoin holders are less likely to sell during downturns, influencing price stability.
• A record number of Bitcoins have remained unmoved on-chain for five years, indicating strong holding behavior.
• The narrative of early Bitcoin adopters selling en masse is overblown and lacks evidence.
• Integration into the financial system is crucial for Bitcoin to become a global reserve asset.
• Bitcoin is still perceived as a risk-on asset, affecting its market behavior.
• The lack of retail demand is a core issue for Bitcoin’s current cycle.
• Bitcoin and crypto are competing with precious metals like silver for investor attention.
• Stablecoins are expected to see significant growth in market cap, doubling in the near future.
• Economic conditions in countries with high inflation drive interest in Bitcoin as a store of value.

Guest intro

Lyn Alden serves as a Director on the Board of Bakkt Holdings, Inc. (NYSE: BKKT), a digital asset infrastructure company focused on Bitcoin, stablecoins, and tokenization. She is the founder of Lyn Alden Investment Strategy, a general partner at Ego Death Capital, and author of “Broken Money: Why Our Financial System is Failing Us and How We Can Make it Better.” Her macroeconomic analysis has appeared in The Wall Street Journal, Forbes, and Bloomberg.

The evolution of Bitcoin’s market cycles

• “The four-year Bitcoin cycle is no longer a law of nature, but cycles still exist” – Lyn Alden
• Bitcoin’s historical cycles have evolved due to changing market dynamics.
• Retail participation has not returned to previous levels despite institutional access.
• “This one played out very differently it felt muted for one simple reason retail participation never fully returned” – Lyn Alden
• The current bear market could be shorter than many expect.
• “Why this bear market could be shorter than many expect” – Lyn Alden
• The muted nature of the previous bull market suggests a shorter bear market.
• “I don’t expect it to be as long of a bear market… primarily the first one that just that that the bull market itself wasn’t very strong” – Lyn Alden
• Long-term holders are less likely to sell during downturns, impacting price movements.
• “I think basically longer term holders not selling anymore when they become exhaust sellers that’s really I think the catalyst for the next cycle” – Lyn Alden

The role of institutional and retail participation

• Retail participation has not fully returned, affecting Bitcoin’s performance.
• “This one played out very differently it felt muted for one simple reason retail participation never fully returned” – Lyn Alden
• Institutional access to Bitcoin has increased, but retail demand remains low.
• The core issue for Bitcoin’s lack of retail demand this cycle is fundamentally a lack of top-line demand.
• “The core issue fundamentally is that there was not a lot of retail demand in this cycle almost all the demand was narrow in in corporations and institutions…” – Lyn Alden
• Bitcoin’s muted performance is largely due to the lack of retail participation.
• “The lack of demand upstream is currently limiting Bitcoin’s price movement despite bullish news” – Lyn Alden
• Long-term holders are less likely to sell during market downturns, impacting price movements.
• “I think basically longer term holders not selling anymore when they become exhaust sellers that’s really I think the catalyst for the next cycle” – Lyn Alden

Bitcoin’s integration into the financial system

• Bitcoin’s integration into the financial system is necessary for it to become a global reserve asset.
• “There was no way it was gonna happen going around it right… you had to have wall street and politics and government’s participation to become big enough to even become a global reserve asset” – Lyn Alden
• Integration with traditional financial systems is crucial for Bitcoin’s growth.
• Bitcoin is still treated as a risk-on asset despite its unique characteristics.
• “It’s still treated like a like a risk risk on asset… I think that’s gonna persist for quite a while” – Lyn Alden
• The narrative that early Bitcoin adopters are selling in mass is overblown and nonsensical.
• “I think it’s an overdone narrative that that ogs are are selling a lot even though they are just like every cycle… I think it’s one of the most nonsensical talking points that we have” – Lyn Alden
• Bitcoin’s decentralization and inability to be frozen make it a superior savings option compared to stablecoins.
• “Bitcoin is… the one that’s actually decentralized… it can’t be frozen… it can’t be debased” – Lyn Alden

The competitive landscape: Bitcoin vs. precious metals

• Bitcoin and broad crypto are competing with precious metals like silver for investor attention.
• “I think that bitcoin and and broad crypto was eating into silver’s use kind of monitor use case a little bit… I do think that they compete over similar mind share” – Lyn Alden
• The strong performance of precious metals has diverted attention away from crypto trading.
• “I do think that the strong run of precious metals was a factor along with ai prediction markets… if they’re not using bitcoin for its kind of key use case… they look around and say well there’s tons of assets” – Lyn Alden
• Bitcoin serves as a globally accessible liquid store of value that is volatile.
• “Bitcoin is a globally accessible liquid store value that’s volatile so it’s one of the options that they can invest in after they say… I wanna diversify outside of just this” – Lyn Alden
• Economic conditions in countries with high inflation drive interest in Bitcoin as a store of value.
• “For example I see this in Egypt for a long time… they eventually wanna go out on the store value spec and those places are probably predisposed to gold still” – Lyn Alden

The future of stablecoins and Bitcoin

• Stablecoins serve as a checking account while Bitcoin functions as a savings account.
• “I think stablecoins are basically for like checking account whereas bitcoin is more like saving account that that’s how I think of them” – Lyn Alden
• The market cap of stablecoins is expected to double and continue growing.
• “I think the market cap’s gonna double stable coins and then you know probably keep going from there” – Lyn Alden
• Bitcoin’s decentralization and inability to be frozen make it a superior savings option compared to stablecoins.
• “Bitcoin is… the one that’s actually decentralized… it can’t be frozen… it can’t be debased” – Lyn Alden
• The lack of demand upstream is currently limiting Bitcoin’s price movement.
• “The key limiter is not… that that’s kind of the bottleneck that used to exist in prior cycles that has been largely solved now and instead the issue is just lack of demand upstream from that” – Lyn Alden

Economic conditions and Bitcoin adoption

• Countries with currency problems and tech savviness are more engaged with Bitcoin and crypto.
• “if you look at you know sure like when chain analysis will list like the top 20 countries by their various metrics of how much they engage with you know bitcoin or crypto it’s usually countries that are one have some degree of a currency problem and two but are also pretty tech savvy” – Lyn Alden
• The economy is likely to remain lukewarm for the foreseeable future.
• “I think basically we’ve run lukewarm for the kind of foreseeable future” – Lyn Alden
• The fiscal deficit remains above average due to limited options for tax increases.
• “one of the bottlenecks against getting the deficit down is that you can’t get a tax increase through congress but they got a basic tax increase through emergency authorization” – Lyn Alden
• The current economic environment is characterized by moderate money supply growth and above-average deficits.
• “I think that base case is I think we’re on a more gradual path at the moment which is you have moderate money supply growth above average deficits and that’s where that’s where it’s fueling it” – Lyn Alden

The role of long-term holders in Bitcoin’s market dynamics

• Long-term holders are less likely to sell during market downturns, impacting price movements.
• “I think basically longer term holders not selling anymore when they become exhaust sellers that’s really I think the catalyst for the next cycle” – Lyn Alden
• There is a record number of Bitcoin that hasn’t moved on-chain in five years.
• “There’s a record number of coins that haven’t moved on chain in five years really now” – Lyn Alden
• The narrative that early Bitcoin adopters are selling in mass is overblown and nonsensical.
• “I think it’s an overdone narrative that that ogs are are selling a lot even though they are just like every cycle… I think it’s one of the most nonsensical talking points that we have” – Lyn Alden
• Bitcoin may experience a period of consolidation before it catches a bid and begins to rise again.
• “I think basically that’s the catalyst for bitcoin next cycle which is it gets forgotten left for dead held by pretty strong hands and then it for no particular reason it just stops going down and then when it builds a a positive price move then that becomes the narrative” – Lyn Alden

The impact of economic narratives on market perception

• The world is not about to end, despite the panic and fear reflected in headlines and social media.
• “It’s saying the world’s not about to end hopefully not as soon as I you know when I open twitter it seems like the world’s about to end” – Lyn Alden
• The current economic environment is characterized by moderate money supply growth and above-average deficits.
• “I think that base case is I think we’re on a more gradual path at the moment which is you have moderate money supply growth above average deficits and that’s where that’s where it’s fueling it” – Lyn Alden
• The fiscal deficit remains above average due to limited options for tax increases.
• “one of the bottlenecks against getting the deficit down is that you can’t get a tax increase through congress but they got a basic tax increase through emergency authorization” – Lyn Alden
• The economy is likely to remain lukewarm for the foreseeable future.
• “I think basically we’ve run lukewarm for the kind of foreseeable future” – Lyn Alden