Lyn Alden: Bitcoin’s four-year cycle is evolving, retail participation is still muted, and financial integration is essential for global adoption.

Important takeaways

• The four-year Bitcoin cycle is evolving, and the cycles are still there but not predictable.
• Bitcoin’s muted performance is largely due to a lack of retail participation, despite institutional reach.
• The current bear market may be shorter than expected, which may impact investment strategies.
• Long-term Bitcoin holders are less likely to sell during a downturn, which influences price stability.
• A record number of Bitcoins have remained static on the chain for five years, showing strong holding behavior.
• Accounts of early Bitcoin wholesalers are rife and unsubstantiated.
• Integration into the financial system is essential for Bitcoin to become a global storage asset.
• Bitcoin is still considered a risky asset, which affects its behavior in the market.
• The lack of retail demand is the main problem of the current Bitcoin cycle.
• Bitcoin and crypto compete with precious metals like silver for investor attention.
• Stablecoins are expected to see significant market capitalization growth, doubling in the near future.
• Economic conditions in countries with high inflation are driving interest in Bitcoin as a store of value.

Guest introduction

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. He is the founder of Lyn Alden Investment Strategy, 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.” His macroeconomic analysis has appeared in the Wall Street Journal, Forbes, and Bloomberg.

The evolution of Bitcoin market cycles

• “Bitcoin’s four-year cycle is no longer a natural law, but cycles still exist” – Lyn Alden
• Bitcoin’s historical cycles have changed due to market fluctuations.
• Retail participation has not returned to previous levels despite institutional outreach.
• “This one played so differently it felt muted for one simple reason that retail participation never fully recovered” – Lyn Alden
• The current bear market may be shorter than many expect.
• “Why this bear market may be shorter than many expect” – Lyn Alden
• The muted nature of the previous bull market suggests a short bear market.
• “I don’t expect to be in a bear market for long… the first is that that bull market wasn’t very strong” – Lyn Alden
• Long-term holders are less likely to sell during a downturn, which affects price movements.
• “I think long time owners are not selling anymore when they become exhaust dealers that’s really what I think is going to be the trigger for the next cycle” – Lyn Alden

The role of institutional and retail participation

• The participation of stores has not fully returned, which affects the performance of Bitcoin.
• “This one played so differently it felt muted for one simple reason that retail participation never fully recovered” – Lyn Alden
• Institutional access to Bitcoin has increased, but retail demand remains low.
• The main problem with Bitcoin’s lack of retail demand in this cycle is the lack of high demand.
• “The bottom line is that there wasn’t a lot of retail demand in this cycle and almost all demand was small for companies and institutions…” – Lyn Alden
• Bitcoin’s muted performance is largely due to a lack of retail participation.
• “Lack of rising demand currently dampens Bitcoin price movement despite good news” – Lyn Alden
• Long-term holders are less likely to sell during a market downturn, which affects price movements.
• “I think long time owners are not selling anymore when they become exhaust dealers that’s really what I think is going to be the trigger for the next cycle” – Lyn Alden

The integration of Bitcoin into the financial system

• The integration of Bitcoin into the financial system is necessary for it to become a global reserve asset.
• “It couldn’t have happened the right way… you had to have wall street and politics and government involvement to be big enough to be a global asset” – Lyn Alden
• Integration with traditional financial systems is essential to Bitcoin’s growth.
• Bitcoin is still treated as a risky asset despite its unique features.
• “It’s still considered an asset risk… I think that will continue for a long time” – Lyn Alden
• The story of early adopters of Bitcoin selling in bulk is overblown and absurd.
• “I think it’s an overstatement that those ogs sell so much even though they’re like every cycle… I think it’s one of the dumbest talking points we have” – Lyn Alden
• Bitcoin’s fragmentation and inability to freeze make it a superior storage option compared to stablecoins.
• “Bitcoin … is decentralized … it can’t be stopped … it can’t be brought down” – Lyn Alden

Competitive landscape: Bitcoin versus precious metals

• Bitcoin and broader crypto are competing with precious metals like silver for investor attention.
• “I think bitcoin and broader crypto have been a bit of a monitor type of silver use… I think they are competing for the same mind share” – Lyn Alden
• The strong performance of precious metals diverted attention from crypto trading.
• “I think the bullishness of precious metals was the trigger and the ai prediction markets… if they don’t use bitcoin for it’s kind of critical use… they look around and say there’s a lot of assets” – Lyn Alden
• Bitcoin acts as a globally accessible and flexible liquid store.
• “Bitcoin is a globally accessible liquid store value that is volatile so it’s one of the options they can invest in after they say… I want to diversify out of this” – Lyn Alden
• Economic conditions in countries with high inflation are driving interest in Bitcoin as a store of value.
• “For example I see this in Egypt for a long time … finally they want to come out with a store price and those places are probably prioritized to have gold” – Lyn Alden

The future of stablecoins and Bitcoin

• Stablecoins act as a checking account while Bitcoin acts as a savings account.
• “I think stablecoins are basically like a checking account and bitcoin is like a savings account that’s how I think about it” – Lyn Alden
• The market cap of stablecoins is expected to double and continue to grow.
• “I think the market cap is going to be two stable coins and you know it’s possible to keep going from there” – Lyn Alden
• Bitcoin’s fragmentation and inability to freeze make it a superior storage option compared to stablecoins.
• “Bitcoin … is decentralized … it can’t be stopped … it can’t be brought down” – Lyn Alden
• The lack of rising demand is currently limiting Bitcoin price movements.
• “The key limitation is not… that what kind of bottleneck existed in previous cycles has now been largely resolved and instead the problem is the lack of demand from that” – Lyn Alden

Economic conditions and Bitcoin adoption

• Countries with financial problems and tech savviness are more involved with Bitcoin and crypto.
• “if you look you know for sure like when the chain analysis will be like the top 20 countries with their various metrics of how well they interact with you who know bitcoin or crypto it’s usually one countries with some degree of financial crisis and two but also with good technical knowledge” – Lyn Alden
• The economy is likely to remain lukewarm for the foreseeable future.
• “I think we’ve actually experienced a kind of foreseeable future” – Lyn Alden
• The fiscal deficit remains above average due to limited options for tax increases.
• “One of the things that prevents debt reduction is that you can’t get a tax increase through congress but they get a basic tax increase through emergency authorization” – Lyn Alden
• The current economic situation is characterized by moderate money supply growth and above average deficits.
• “I think that’s the case is that I think we’re on a slow path right now which means you have limited growth in the money supply above the deficit and that’s where it gets worse” – Lyn Alden

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

• Long-term holders are less likely to sell during a market downturn, which affects price movements.
• “I think long time owners are not selling anymore when they become exhaust dealers that’s really what I think is going to be the trigger for the next cycle” – Lyn Alden
• There is a record number of Bitcoins that have not left the chain in five years.
• “There are a record number of coins that haven’t advanced in five years now” – Lyn Alden
• The story of early adopters of Bitcoin selling in bulk is overblown and absurd.
• “I think it’s an overstatement that those ogs sell so much even though they’re like every cycle… I think it’s one of the dumbest talking points we have” – Lyn Alden
• Bitcoin may have time to consolidate before it catches the bid and starts to rise again.
• “I think that’s the reason for the next cycle of bitcoin which is that you forget that you’re dead in a tight grip and for no reason it just stops going down and then when it creates a good price movement then it’s a story” – Lyn Alden

The impact of economic narratives on market perception

• The world is not over, despite the panic and fear that appears in the headlines and on social media.
• “The world isn’t going to end, I hope you don’t know if I open twitter and it looks like the world is going to end” – Lyn Alden
• The current economic situation is characterized by moderate money supply growth and above average deficits.
• “I think that’s the case is that I think we’re on a slow path right now which means you have limited growth in the money supply above the deficit and that’s where it gets worse” – Lyn Alden
• The fiscal deficit remains above average due to limited options for tax increases.
• “One of the things that prevents debt reduction is that you can’t get a tax increase through congress but they get a basic tax increase through emergency authorization” – Lyn Alden
• The economy is likely to remain lukewarm for the foreseeable future.
• “I think we’ve actually experienced a kind of foreseeable future” – Lyn Alden