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

Basic considerations

• Bitcoin’s traditional four-year 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 may be shorter than expected and may affect investment strategies.
• Long-term holders of Bitcoin are less likely to sell when a downturn affects price stability.
• A record number of bitcoins have remained unmoved on the chain for five years, indicating strong holding behavior.
• The story of Bitcoin’s early adopters is widely sold and lacks evidence.
• Integration into the financial system is essential for Bitcoin to become a global reserve asset.
• Bitcoin is still considered a risky asset, which affects its market behavior.
• The lack of retail demand is a major issue in the current era of Bitcoin.
• Bitcoin and crypto compete with precious metals like silver for investor attention.
• Stablecoins are expected to double their significant growth in market capitalization in the near future.
• Economic conditions in countries with high inflation are increasing interest in Bitcoin as a store of value.

Introduction of guests

Lynn 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, the general partner of Ego Death Capital, and the author of Broken Money: Why Our Financial System is Failing Us and How We Can Make It Better. His macroeconomic analysis has been published in The Wall Street Journal, Forbes and Bloomberg.

Evolution of Bitcoin market cycles

• “Bitcoin’s four-year cycle is no longer a law of nature, but cycles still exist” – Lynn Alden
• Bitcoin’s historical cycles have evolved due to changing market dynamics.
• Despite institutional access, retail participation has not returned to previous levels.
• “It played out differently, for the simple reason that retail participation never fully recovered” – Lynn Alden
• The current bear market may be shorter than many expect.
• “Why This Bear Market May Be Shorter Than Many Expect” – Lynn Alden
• The slow nature of the previous bull market suggests a shorter bear market.
• “I don’t expect this to extend the bear market … first of all, the bull market itself wasn’t very strong” – Lynn Alden
• Long-term holders are less likely to sell when a downturn affects price movements.
• “I think the long-term holders, when they become exit sellers, don’t sell anymore, which is really what I think is the catalyst for the next period” – Lynn Alden

The role of institutional and retail participation

• Retail participation has not fully returned, affecting Bitcoin’s performance.
• “It played out differently, for the simple reason that retail participation never fully recovered” – Lynn Alden
• Institutional access to Bitcoin has increased, but retail demand remains low.
• The main issue for the lack of retail demand for Bitcoin during this period is essentially the lack of demand at the premium level.
• “The main problem is that during this period there was not much demand for retail, almost all demand was tight in corporations and institutions…” – Lynn Alden
• Bitcoin’s muted performance is largely due to a lack of retail participation.
• “Lack of upstream demand now limits Bitcoin price movement despite bullish news” – Lynn Alden
• Long-term holders are less likely to sell when the market declines, affecting price movements.
• “I think the long-term holders, when they become exit sellers, don’t sell anymore, which is really what I think is the catalyst for the next period” – Lynn Alden

Integrating Bitcoin into the financial system

• Integrating Bitcoin into the financial system is necessary for it to become a global reserve asset.
• “There was no way around it going right…you had to have Wall Street and politics and government involvement to even become a global reserve asset” – Lynn Alden
• Integration with traditional financial systems is critical to Bitcoin’s growth.
• Despite its unique features, Bitcoin is still considered a risky asset.
• “It’s still viewed as a risk asset … I think it will be for a long time” – Lynn Alden
• The story that Bitcoin’s early adopters peddle is exaggerated and absurd.
• “I think it’s an overblown narrative that ogs sell a lot, even though they’re like every other era… I think that’s one of the most absurd points we have” – ​​Lynn Alden
• Bitcoin’s decentralization and inability to freeze make it a great savings option compared to stablecoins.
• “Bitcoin… is truly decentralized… it can’t be frozen… it can’t be tampered with” – Lynn Alden

Competitive Landscape: Bitcoin vs. Precious Metals

• Bitcoin and broader crypto compete with precious metals like silver for investor attention.
• “I think Bitcoin and crypto in general have a bit of a silver screen type of usage… I think they’re competing for the same share of mind” – Lynn Alden
• Strong activity in precious metals has taken the focus away from crypto trading.
• “I think the strong rise in precious metals along with the AI ​​prediction markets was a factor … if they don’t use bitcoin for its key use … they’ll look around and say there are tons of assets” – Lynn Alden
• Bitcoin serves as a globally accessible liquid store that is volatile.
• “Bitcoin is a globally available liquid store of value that’s volatile, so it’s one of the options they can invest in after they say … I want to diversify outside of that” – Lynn Alden
• Economic conditions in countries with high inflation are increasing interest in Bitcoin as a store of value.
• “For example, I’ve been seeing this for a long time in Egypt … they’re going to eventually go out on store value, and those places are probably going to go gold” – Lynn Alden

The future of stablecoins and Bitcoin

• Stablecoins serve as a checking account, while Bitcoin works as a savings account.
• “I think stablecoins are mostly checking accounts, while bitcoins are more like holding accounts, which is how I think of them” – Lynn Alden
• The market value of stablecoins is expected to double and continue to grow.
• “I think the market cap will double for stablecoins and then you know it’s probably going to keep going from there” – Lynn Alden
• Bitcoin’s decentralization and inability to freeze make it a great savings option compared to stablecoins.
• “Bitcoin… is truly decentralized… it can’t be frozen… it can’t be tampered with” – Lynn Alden
• The lack of upstream demand is currently limiting Bitcoin’s price movement.
• “The main limiter is not … it’s the kind of bottleneck that existed in previous cycles that has now largely been resolved and instead is simply a lack of upstream demand” – Lynn Alden

Economic Conditions and Bitcoin Adoption

• Countries with currency problems and technological know-how are more involved with Bitcoin and crypto.
• “If you consider, you believe, when the analysis of the chains lists the top 20 countries according to their various measures, how well they know bitcoin or crypto with you, these are usually countries that have a degree of currency problems and two people, but also know good technologies” – Lynn Alden
• The economy is likely to remain warm for the foreseeable future.
• “I think we’re basically running a little hot for the foreseeable future” – Lynn Alden
• The budget deficit remains above average because of limited options for tax increases.
• “One of the obstacles to reducing the deficit is that you can’t get a tax increase through Congress, but they got a major tax increase through the emergency authorization.” – Lynn Alden
• The current economic environment is characterized by moderate money supply growth and above-average deficits.
• “I think the bottom line is that I think we’re on a gradual path right now where you have moderate growth in the money supply above average deficits and that’s where it gets burned” – Lynn Alden

The role of long-term holders in the dynamics of the Bitcoin market

• Long-term holders are less likely to sell when the market declines, affecting price movements.
• “I think the long-term holders, when they become exit sellers, don’t sell anymore, which is really what I think is the catalyst for the next period” – Lynn Alden
• There is a record number of Bitcoins that have not moved on the chain for five years.
• “There is a record amount of coins that haven’t moved on chain in five years” – Lynn Alden
• The story that early adopters of Bitcoin are selling to the masses is exaggerated and absurd.
• “I think it’s an overblown narrative that ogs sell a lot, even though they’re like every other era… I think that’s one of the most absurd points we have” – ​​Lynn Alden
• Bitcoin may go through a period of consolidation before it picks up demand and rises again.
• “I think basically this is the catalyst for the next round of bitcoin, where it’s forgotten until it’s held dead in a very strong hand, and then for no reason it stops going down, and then it creates a positive price movement, it becomes a legend” – Lynn Alden

The impact of economic narratives on market perception

• Despite the panic and fear reflected in the headlines and social media, the world has not ended.
• “That being said, the world hasn’t ended, I hope, when I know when I open Twitter, it looks like the world is ending.” – Lynn Alden
• The current economic environment is characterized by moderate money supply growth and above-average deficits.
• “I think the bottom line is that I think we’re on a gradual path right now where you have moderate growth in the money supply above average deficits and that’s where it gets burned” – Lynn Alden
• The budget deficit remains above average because of limited options for tax increases.
• “One of the obstacles to reducing the deficit is that you can’t get a tax increase through Congress, but they got a major tax increase through the emergency authorization.” – Lynn Alden
• The economy is likely to remain warm for the foreseeable future.
• “I think we’re basically running a little hot for the foreseeable future” – Lynn Alden