The Real Reason Bitcoin Topped Early & What Comes Next | Lyn Alden

Summary

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The Real Reason Bitcoin Topped Early & What Comes Next

The Wolf Of All Streets with Scott Melker ft. Lyn Alden

Date: February 28, 2026

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Overview

In this episode, Scott Melker and macro analyst Lyn Alden dissect the current state of the Bitcoin market after a cycle that defied classic four-year expectations. They challenge the prevailing narratives about “OG dumping,” discuss muted retail participation, the intertwining of Bitcoin with traditional finance, and explore what could catalyze the next bull run. The conversation moves through macroeconomic factors, the roles of institutions vs. retail, stablecoins, and what truly turns someone from dollar-seeking to long-term Bitcoin holding.

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Key Discussion Points & Insights

1. The Unexpected Bitcoin Cycle: Breaking the Four-Year Mold

• Bitcoin’s performance surprised both host and guest:
  • 2024 outperformed Lyn’s expectations (topped at $100K), but 2025 underperformed (peak at $126K, below the hoped $150K).
    • “[The cycle] kind of did better than I expected. But then in 2025 Bitcoin did worse than I expected.” (Lyn, 01:21)
• Four-year cycle losing relevance:
  • The halving is now a minor factor, as mined coins are a small share compared to overall market forces.
  • Self-fulfilling belief in the cycle causes people to sell at expected moments.
    • “There’s no fundamental reason why the four-year cycle should be a thing anymore… But cycles still exist.” (Lyn, 01:55)
• Market dynamics:
  • This bear market may be shorter due to a muted bull run and absence of euphoric excess.
    • "Bullishness builds momentum to the upside, bearishness… to the downside... I would expect this bear market would be shorter.” (Lyn, 01:55; expanded at 07:21)

2. The ‘OGs Are Dumping’ Narrative – Overblown or Real?

• Statistical misunderstanding:
  • The idea of OGs (long-term holders) dumping is overstated.
    • “It’s an overdone narrative that OGs are selling a lot—even though they are, just like every cycle.” (Lyn, 05:29)
  • Record number of coins unmoved in five years – actual on-chain selling by OGs is not high.
• Reasons OGs sell:
  • Profit realization after 10–20x gains, lifestyle upgrades, not ideological disillusionment.
  • As Bitcoin matures, the “OG” group grows, so the same percent of sellers represents more coins.
    • “There’s way more OGs that can sell… but the percentage that have sold is pretty small.” (Lyn, 04:33)

3. Institutionalization and Retail Absence

• Bitcoin gets ‘corporatized’:
  • Not Bitcoin adapting, but institutions adapting to access Bitcoin. ETFs and Wall Street increase access, but it doesn’t change the asset’s nature.
    • “Bitcoin hasn’t changed… the fiat system pulled some Bitcoin into it.” (Lyn, 06:19)
• Retail buyers missing in action:
  • Demand in the last cycle was primarily corporate/institutional via ETFs; little hardware wallet adoption.
    • “There was not a lot of retail demand this cycle. Almost all the demand was narrow in corporations and institutions.” (Lyn, 10:19)
  • Explanations:
    • AI and tech sector drew retail excitement and capital.
    • Negative crypto news (FTX, meme coins, scams) and stagnation in altcoins.
    • Competing speculative assets: gold, silver, AI stocks, prediction markets.
    • “AI drew a lot of attention. I think that’s a big factor.” (Lyn, 11:10)
    • “Gold and silver…compete over similar mindshare [with Bitcoin].” (Lyn, 13:22)

4. Correlation with Other Markets

• Bitcoin trades like a risk-on asset, especially with tech/software stocks.
  • Automatically lumped in by algorithms and investors.
    • “Right now it’s oddly correlated to software stocks. There’s no particular reason why it should be correlated, but… it’s still treated like a risk asset.” (Lyn, 09:14)

5. Altcoins and ‘Alt Season’ Fail to Materialize

• Crypto four-year cycle absent:
  • No significant “alt season;” speculative energy flowed to equities and other markets instead.
    • “Altcoins didn’t really run… in some ways that damages the brand [of crypto].” (Lyn, 11:47)
    • “Crypto-adjacent equities looked like an alt season to me; gold and silver look exactly like a crypto cycle would have looked.” (Host, 14:25)

6. What Will Drive the Next Bitcoin Cycle?

• Consolidation & Forgotten Assets:
  • Analysts see a long period of chop/consolidation ahead—but little systemic risk of deeper drawdowns.
  • Next big move may come when Bitcoin is “left for dead” and only strong hands remain, then a narrative shift triggers renewed interest.
    • “…when it’s only held by pretty strong hands and it starts to set a floor. For no particular reason, it just stops going down. And then when it builds a positive price move, that becomes the narrative.” (Lyn, 15:09)
• Bullish news sometimes only matters after the fact:
  • Price action leads, narratives follow.
    • “When price moves, do you think [bullish headlines] could be narratives, looking back, that people say were catalysts? In hindsight, I think so.” (Host & Lyn, 16:45–17:11)

7. Bitcoin and Stablecoins: Parallel Financial Futures

• Stablecoins = ‘checking accounts,’ Bitcoin = ‘savings account’:

  • Stablecoins democratize “offshore” dollars for the world, with low friction and broad utility.
  • Bitcoin’s unique role: global, decentralized store of value, can’t be frozen or debased, but is volatile.
    • “Stablecoins are basically for checking account, whereas bitcoin is more like saving account.” (Lyn, 18:26)

• Why people in emerging markets want dollars and when they move to Bitcoin:

  • Most just want stability—i.e., the dollar—especially in the short term.
  • Once their “dollar need” is satisfied, they diversify (e.g., into gold or Bitcoin) for longer-term store of value.
    • “I see this in Egypt…there’s a certain point where they say, well, I want to diversify outside of just this.” (Lyn, 20:25)

• Global adoption patterns:

  • Tech-savvy, inflation-prone countries (Nigeria, Vietnam) are leading in adoption of Bitcoin and stablecoins.
    • “Countries with currency problems and are tech savvy…[are] usually the ones high in bitcoin/crypto adoption.” (Lyn, 21:50)

8. The Macro Backdrop: Flat or Decelerating Train

• Economy running “lukewarm”:
  • Money supply growth slightly below average, deficits above average; policymakers’ levers limited.
    • “The train is basically flat to slightly decelerated. There’s really no signs of major acceleration.” (Lyn, 23:26)
• US fiscal policy & global impact:
  • Potential for rate cuts to “run things hot” ahead of midterms, but constrained by structure and legal limitations.
  • No imminent “yield curve control.” Expect a “two-speed economy,” with AI/deficit beneficiaries outperforming.
    • “I think the two-speed economy is going to keep going…” (Lyn, 23:26)
• Black swans always possible, but base case is continued status quo:
  • “We have near record low consumer sentiment while stocks are all time highs… Part of the two-speed economy.” (Lyn, 25:10)
  • “On any sort of investment time horizon, I think status quo keeps going on for quite a while.” (Lyn, 26:25)

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Notable Quotes & Memorable Moments

• On self-fulfillment of the cycle:
  • “There’s no world where [Bitcoin] becomes a multi trillion dollar asset that’s somehow magically only held by retail. That’s just not how markets work.” (Lyn Alden, 06:19)
• On retail demand absence:
  • “Almost all the demand was narrow in corporations and institutions…very little people buying a hardware wallet for the first time.” (Lyn Alden, 10:19)
• On new narratives post-bull run:
  • “When something gets left for dead, held by strong hands, and just stops going down, when it builds a positive price move, that becomes the narrative.” (Lyn Alden, 15:09)
• On stablecoin and bitcoin use:
  • “Stablecoins are basically for checking account, whereas bitcoin is more like saving account.” (Lyn Alden, 18:26)
• On how hype cycles move:
  • “Gold and silver… compete over similar mindshare. They’re hard monies you can self-custody. If someone’s only viewing it as a line on a screen, Bitcoin’s just one.” (Lyn Alden, 13:22)

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Timestamps for Key Segments

• 00:11-01:38 | The cycle’s muted performance and Lyn's expectations
• 01:55-03:33 | The case for (and limits of) the “four-year cycle”
• 04:31-05:52 | OGs selling: data vs. narrative
• 07:02-08:21 | Why the bear market could be shorter than usual
• 09:14-10:54 | Bitcoin’s correlation with tech stocks and lack of retail demand
• 11:10-14:25 | Why retail was absent, and where speculation flowed instead
• 15:09-16:43 | How the next bullish phase may begin
• 18:02-21:50 | How bitcoin and stablecoins serve different needs globally
• 23:04-26:25 | Macroeconomic outlook, deficits, and black swan risks

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Tone and Style

Conversational, thoughtful, with a critical and data-driven perspective. Lyn Alden consistently grounds speculation with on-chain evidence or macro fundamentals, while Scott Melker injects practical trading and community sentiment angles.

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Conclusion

This episode offers a nuanced, macro-aware view of Bitcoin's current phase—deconstructing tired narratives, recognizing the importance (and absence) of retail, and casting forward to what might drive the next wave of interest. The coexistence of Bitcoin and stablecoins, the shifting nature of speculation, and the two-speed global economy are highlighted as the dominant themes for crypto’s near future.

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Transcript

[Host]

This bitcoin cycle was supposed to be different and in some ways it was. The four year cadence definitely isn't a

[Interviewer]

law of nature anymore.

[Host]

Cycles do still exist, but this one

[Interviewer]

played out very differently.

[Host]

It felt muted for one simple retail

[Interviewer]

participation never fully returned.

[Host]

Institutions and ETFs made access to Bitcoin easier than ever. Yet despite that structural progress, Bitcoin still traded like a risk on asset, moving in correlation with software stocks and tech

[Interviewer]

on the way down.

[Host]

While bullish headlines had limited impact on price on the way up. Lyn breaks down why the OGs are dumping narrative is overstated, why this bear market could be shorter than many expect and how a two track financial future is emerging. And the real question what ultimately moves someone from I just want dollars to choosing Bitcoin as a long term store of value.

[Lyn Alden]

That's dope. That's dope.

[Interviewer]

We haven't spoken obviously in a few months Bitcoin's trading lower. I'm sure that it was. Has anything changed, any new data points, anything coming from economic data that's changed your thesis at all?

[Lyn Alden]

Uh, no. Short answer is no. I think the obviously this was a disappointing cycle that we've had. So it's funny, I didn't expect bitcoin to hit 100k in 2024 so it kind of did better than I expected. But then in 2025 Bitcoin did did worse than I expected. I was hoping to see 150k. We only got to 126. So disappointing cycle. But I nothing's different about the thesis itself.

[Interviewer]

So you do view it as a cycle because that's been one of the sort of fundamental debates I think in the crypto community in general is whether the four year cycle is dead, even if it's not, whether it's changed or whether this was just yet another. It hit a high at the exact right moment and see you in three years.

[Lyn Alden]

I think there was some self fulfilling aspect to it where people, because they think the cycle's there, they kind of sell in anticipation of it and therefore cause the cycle that they feared. There's no fundamental reason why the four year cycle should be a thing anymore. Obviously that was based on, you know, the new coins used to be a very big percentage. So when that new supply would get cut in half, that was a really big deal. Now new coins for mining are a tiny share of Bitcoin, so them getting cut in half is not a material factor compared to many other factors in the market. But cycles still exist. I mean there are you Know, bullishness builds momentum to the upside, it builds bearishness, builds momentum to the downside. So you still have liquidity cycles, you still have these kind of price cycles that happen. Even though I think there's no particular reason to think there's a four year cadence anymore. And I would expect that this would be. The bear market would be shorter because I don't think the halving is a big catalyst for the next bull run. I think basically longer term holders not selling anymore when they kind of exhaust sellers, that's really I think the catalyst for the next cycle, not the having.

[Interviewer]

Right. In previous cycles those longer term sellers didn't sell and they weren't the reason that we drew down as far as we have. I think if you look at any on chain data or just anecdotally, it feels like they've exited this time. So do you think that it was just because 100,000 was a magic price and holy crap, I'm so rich, I never imagined this and that that was it. Do you think maybe there's a bit of frustration with the direction that bitcoin's taken against their libertarian values? I mean, why this time has it been the long term holders that really have exited?

[Lyn Alden]

I think it's actually and I push back a little bit on this narrative, I think it's more of it's a kind of a game of statistics and a couple things I can add to that. So one is, you know, what is an og? We can define it a couple ways. Now it is true that every bull cycle, those that have held for a number of years tend to start selling into that strength. It's not because, you know, usually because they're disillusioned with bitcoin, quite the contrary. It's because they, they bought years ago, they're up 10x20x or more on their position. It went from 2% of the net worth to 90% of the net worth. Many of them have families, they want to increase, you know, they increase their consumption and lifestyle and stuff like that. So you do get that selling pressure every bull cycle from, from the longer term holders to those newer buyers, that happens every cycle. When you look at say for example the percentage of coins that have held over year on chain, it's not been a particularly big selling period. From that perspective right now the there's a record number of coins that haven't moved on chain in five years. Really?

[Interviewer]

Yes, I actually hadn't seen that.

[Lyn Alden]

And that's true. Now what is also true though, and this is where Kind of statistics gets weird. Bitcoin is now a 17 year old asset. So there's a bigger sample of longer term holders, people that have hold five years and not even that OG anymore, even 10 years. People who bought 10 years ago, they bought seven years into Bitcoin's life cycle. So there's way more OGs that can sell. Whereas if you know, you look at a percentage that have sold, it's pretty small. So I actually think that this cycle has not been particularly bad from an OG selling perspective.

[Interviewer]

I never thought about that at all. Literally just if there's more OGs then it's a disproportionate effect because the asset is still relatively small. So even if it's the same 5% that choose to sell, they have more coins, higher net worth and I guess disproportionately impact the market. Yeah, so really interesting. So you don't think that there's a fundamental reason that they're selling in mass at all?

[Lyn Alden]

I don't think so. No. I think, I mean anecdotally you'll have individuals say that, you know, I don't like the fact that bitcoin got corporatized, whatever that means. So around the margins you can always find examples of a narrative. But I think the numbers from what, everything I've seen, all the stuff I've looked into that it's not, it's an overdone narrative that OGs are selling a lot even though they are just like every cycle.

[Interviewer]

Yeah, I think it's a talking point and I think it's one of the most nonsensical talking points that we have. I don't understand how even if you got into Bitcoin early for libertarian values and to exit the system, how did you believe Bitcoin was going to become the global reserve asset without going through the system? Yeah, there was no way it was going to happen going around it. Right. I mean you had to have Wall street and politics and government participation to become big enough to even become a global reserve asset. If that's what they believe.

[Lyn Alden]

Yeah, I mean there's no world where it becomes a multi trillion dollar asset that's somehow magically only held by retail. That's just not how markets work now. And people often say things like Bitcoin lost its way, it turned to the system. But Bitcoin hasn't changed. It's basically the fiat system pulled some Bitcoin into it, the regulatory system changed, it got big and liquid enough that it could capture the interest of institutions. Obviously the ETFs were made. But that's not bitcoin changing to adapt to the corporate side. That's the corporate and institutional side pulling bitcoin into itself. So I think bitcoin's working the same way that it has five years ago, 10 years ago, 15 years ago.

[Interviewer]

So you said before that you don't expect it to be as long of a bear market. Is that based on the fact that the bull market itself was so muted or just that the halving is no longer a factor as you discussed? Are there other metrics that you're looking for in macro that maybe allude to that liquidity coming in? A lot of the other narratives that

[Lyn Alden]

we've had, I think primarily the first one that just that the bull market itself wasn't very strong. And I think that that will affect the, my, at least my base case of the duration of the bear market and the euphoria that we did see was mostly, you know, every kind of cycle has a particular area of euphoria. This time it was bitcoin treasury companies. So some of those are trading at, I mean the big ones trading at know 3 to 8 times M nav obviously some of the smaller ones you get almost to infinite M Nav because it's like almost didn't even buy bitcoin yet. They're trading at high levels. That's where obviously a lot of the, the real pain that that's where they get their like 99% draw down. But I think that you know, absence something really big blowing up, I think, I think this bear market can be absorbed more quickly than prior ones maybe. Famous last word of course.

[Interviewer]

But I mean I've made the same point. If we didn't even get a 2x from the last all time high, why would we get an 85 or 90% sustained three year drawdown? So the bottom really could be close or in.

[Lyn Alden]

I think so. And I mean historically outside of like the COVID stimulus, Bitcoin doesn't usually have like V shaped recoveries. Usually when it goes down it finds a floor and then it goes like sideways on that floor for a long time. We were, we were doing that in November for like two months. Then we rolled to a new floor. Now we're kind of chopping along this new floor. I don't know if we get a third, you know, waterfall sell off to another lower but I do think that'll be a process to get back. I don't, you know, even though I'm not saying I don't think we'll see a multi year bear market. But I also don't think we just snap our fingers and go back up to 100k, you know, in a month.

[Interviewer]

But that said, do you think that Bitcoin is now officially uncorrelated from other markets? Because I don't think talking about Bitcoin cycles and how it's going to behave is really that related now to what's going to happen with markets writ large. Unless you have the same thesis for

[Lyn Alden]

the stock market right now it's oddly correlated to software stocks.

[Interviewer]

Yeah, that's the new thing.

[Lyn Alden]

Yeah. It doesn't make a lot of sense.

[Interviewer]

I mean algorithm software, ETF and the

[Lyn Alden]

Bitcoin chart algorithms can hop on that and kind of make something happen. Yeah. There's no particular reason why it should be correlated with other assets, but just it gets lumped in. It's still because it's small and volatile, still treated like a, like a risk, risk on asset. I think that's going to persist for quite a while. But I don't really expect any, any one particular correlation. I think that I think the, on average the liquidity correlation will still be relevant. But that's relevant for a lot of assets. It's just that bitcoin almost like because it lacks earnings season, you know, it can't. There's really not new surprising information that Bitcoin can announce the way that a company can announce. So it's just an asset that kind of trades like a stock in a way, but without some of the other idiosyncrasyncratics of a stock.

[Interviewer]

Which kind of makes sense as to why Bitcoin hasn't participated in the upside of stocks in the past months or year. But it's participated every time in the downside.

[Lyn Alden]

Yeah. And I think the core issue fundamentally is that there was not a lot of retail demand this cycle. Almost all the demand was narrow in corporations and institutions. People who have a brokerage account that spot Bitcoin ETFs make easier to get access. That's where a lot of that was focused. There's very little people buying a hardware wallet for the first time. Getting Bitcoin is a very weak cycle in that regard. And so people can point to this fund blew up and that hurt the price and this happened. But the core issue is just lack of, lack of kind of top line demand this cycle.

[Interviewer]

Why do you think retail didn't participate this time? Because Bitcoin's been in the news more than ever. There's been incredibly, I think objectively Bullish stories left and right. Every wirehouse is here, everybody can get access and it seems like they're just not interested.

[Lyn Alden]

I think one is that AI drew a lot of attention. I think that's a big factor. I'm not the first person to point that out obviously, but I think that's a very large factor. Two, you know, because bitcoin's a global market, you know, there's not been a lot of demand out of China for example. And I think basically most people at this point know of it. They, they still mix it with the rest of crypto. Crypto for the most part was only in the kind of the, the negative headlines this past couple years. Meme coins grift kind of just started

[Interviewer]

FTX and go downhill.

[Lyn Alden]

Yeah, yeah, start from it. And so it, there's really, we haven't really had any sort of like really for, for the most part the cycle and you know, the things that have had their little runs of mostly really low quality stuff and I think that, that in some ways kind of damages the brand and I think that it'll take time for bitcoin to kind of decouple from that. And there's still a roughly trillion dollar altcoin market that I, I still think is overpriced and I, I, I think we're going to enter a pretty long period of stagnation in that broad space outside of bitcoin and stablecoins. And I think that is an anchor on bitcoin until it eventually decouples.

[Interviewer]

Yeah, that's one of the issues I've had with the notion of the four year cycle being intact is that there was no alt season, which there's a bitcoin four year cycle, but to me it's a crypto four year cycle. And the way that bitcoin and altcoins behave versus one another was always a fundamental part of that and we got none of it. Yeah, yeah. To your point, I kind of joked at the time that it was treasury companies and crypto adjacent equities that got alt season. Circle launched, Etoro launched, Bullish launched. We got all the Christmas tree charts that you would have gotten from ICOs or alt season. They just happened somewhere else.

[Lyn Alden]

Yeah, I agree, I agree.

[Interviewer]

And the other side of that, when I kind of look at where the liquidity went or what happened, I think now we have prediction markets and so you can gamble on the weather. Why do you need to gamble on a random altcoin? For people who didn't have access to gambling before and silver and Gold, I would say more silver, personally.

[Lyn Alden]

Silver, yeah.

[Interviewer]

But I mean what do you think of, do you think that that's taken, no pun intended, to shine off of crypto trading or at least the speculative side of it?

[Lyn Alden]

I think to some extent, and a point that I made in prior cycles is that I think that bitcoin and broad crypto was eating into silver's kind of monetary use case a little bit that people that would have otherwise speculated on silver just went elsewhere. Obviously that came back this cycle. Silver kind of reminded people that it exists and can do pretty wild price swings. So I do think that they compete over similar mindshare. You know, they're, they're hard monies that you can kind of self custody. They have that they have that kind of aspect to them and you know they're, they're bought and sold globally outside of the quote unquote system. So I do think that the strong run in precious metals was a factor along with AI prediction markets, other things. There's plenty of things for people to go into and if they're not using Bitcoin for its kind of key use case, like the fact that they can self custody a liquid portable asset, then they look around and say, well there's tons of assets by anything to go up. Yeah, bitcoin's just one. If someone's only viewing it as a line on a screen.

[Interviewer]

Yeah. I mean again, if crypto adjacent equities looked like an alt season to me, gold and silver look exactly like a crypto cycle would have looked. You had this massive move in gold, let's call that bitcoin. Right. And then either when it flattened or people found out there were other things that they could trade, they got really interested in ethereum, AKA silver or xrp, call it whatever you want. And that's where retail really participated. I didn't hear random people on the street telling me about gold prices, but everybody was asking me about silver prices.

[Lyn Alden]

Yeah, I think that did capture quite a bit of attention. And then like I said, you add AI stocks to that too. Everyone's talking about Nvidia multitrillion dollar asset. There's other ones. And that's where I that pulled a lot of capital, I think into these things.

[Interviewer]

So what brings them back, I think

[Lyn Alden]

partially is that those other things run their course. You know, they get to a size where it takes a lot more income and liquidity even keep it at those levels and it starts to sag under its own success in a way. I think that the AI companies eventually they've reached like a massive, you know, scale. And it's just hard to keep pumping them further than they, than they go. We run into some bottlenecks around power and data centers and things like that as well. Kind of the real world frictions. And then sometimes just, you know, something is just so under owned and it's, and it's only held by like pretty strong hands and it starts to set a floor. You know, one of the things I was looking at last year was like Latin American bank stocks and it's like, you know, they're globally, no one wants to touch them. And they had a crazy year out of nowhere in 2025. Who would have guessed, like in a, in a trade war year that Latin American bank stocks would have done amazing? And it's because they just, there's no single reason they were just so under owned that actually when they turned out that their fundamentals were fine, it only takes a little bit of income and capital to make them soar from, from kind of cheap levels. And 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 for no particular reason, it just stops going down. And then when it builds a positive price move, then that becomes the narrative.

[Interviewer]

All right. Which aligns with the theory that we could be in for 150, 250, 300 days of consolidation down here before it inevitably catches a bid.

[Lyn Alden]

It's possible, yeah. I wouldn't rule it out.

[Interviewer]

Yeah. It's interesting though, because as I said before, we've had more, I think, fundamentally bullish news than we could imagine. Right. Every day it's blackrock, JP Morgan, Morgan Stanley, Strategic Bitcoin reserves, and none of it has moved price. Is that just a telltale sign of a bear market? Is that doesn't matter how bullish the news is, price just stays down. But when price moves, do you think those could be narratives, looking back, that people say were catalysts? In hindsight, I think so.

[Lyn Alden]

I mean, all these things like the frictions of capital getting into Bitcoin when it wants to are now way lower.

[Interviewer]

Yeah.

[Lyn Alden]

And 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. And it's, it's not just, I mean, you know, we think a lot of US markets, but I mean, bitcoin's a global market and just globally there's just not Been a ton of retail demand. Now you can get things like on a country by country basis. You know, when people like get bank accounts frozen, they suddenly wake up to, hey, maybe, you know, stablecoins and bitcoin are interesting things, but for a lot of people, if they're in an environment where their payment system works pretty well, there's a lot of other things they can own. I think basically until the price runs, they just kind of ignore it.

[Interviewer]

How do you frame now the relationship between bitcoin and stablecoins? Obviously two sides of a similar coin, right? The two killer use cases of technology, I would argue, and there's some irony in digital fiat being the killer use case of what was created with bitcoin. But now that people all over the world have access to both, how do you think we see that future?

[Lyn Alden]

I mean, I think stablecoins are basically for checking account, whereas bitcoin is more like saving account. That's how I think of them. You know, basically what stablecoins did is they took the concept of an offshore bank account and instead of making it just for the ultra wealthy, they made it for everyone. Anyone who has a smartphone. Using technology, they greatly compress the overhead of effectively having a bank account. So not just access to dollars, but access to payments with those dollars available to everyone. And because they don't pay interest usually, and even if they did, people don't want to hold them for years and years and years at scale, but they use them like a checking account. They use them for working capital, they use them for dry powder. And I think that, you know, I think the market cap's going to double of stablecoins and then, you know, probably keep going from there. And whereas bitcoin is, you know, it's volatile, but it's the one that's actually decentralized, at least as best as we know how to make something decentralized. And, you know, it can't be frozen, can't be, you know, just unilaterally stopped in the way the stablecoin can, can't be debased. And so I think that that's, that's savings, but it's volatile. So I think that they, I think they coexist for quite a long time.

[Interviewer]

I wonder what the learning curve or time frame for that to happen is, because I would make the argument that seeing how stablecoins have proliferated, that for most people in a country with a hyperinflating currency, getting a dollar is enough. That was. That's probably what they've been trying to do forever. I can say anecdotally, I had a friend who moved to Argentina and he used to tell me stories how he would get money sent to his bank. He would take it out of the bank, go to the black market, convert it into dollars in cash because all he wanted was dollars. And then we go back and put the money in the safety deposit box in the bank instead of into his account so he could hold the cash. I think in most places that's where they're mentally thinking is they just want the dollar. Now they can get the stablecoin. So what makes them then take the jump to bitcoin?

[Lyn Alden]

It's often a matter of percentage. So for example, I see this in Egypt. For a long time, Egypt had pretty high inflation. People of course want dollars, but generally speaking, when they get enough of them, then they start saying, well, maybe goals. Or they say, maybe. Obviously there in many other places, real estate's popular. They say, well, maybe I want to buy an apartment that I have. It's a real tangible thing that has some degree of scarcity to it. And they go from there. And basically bitcoin is a globally accessible liquid store of value that's volatile. So it's, it's one of the options that they can invest in after they say, you know, I think I have enough dollars here. You know, I can only stick so much in safe deposit box. Or in Egypt, I mean, people literally the classic under your mattress dollars, more or less. There's a certain point where they say, well, I want to diversify outside of just this. They use it for working capital. They say, okay, maybe I want to buy a car in 18 months and I want to save in dollars to reach that. But then people don't really want to save five years of stuff in dollars. They eventually want to go out on the kind of the store value spectrum.

[Interviewer]

And those places are probably predisposed to gold still. So there's also that pivot is the digital gold narrative and choosing bitcoin over the rest. But I imagine if they're in stablecoins, the friction to bitcoin is a lot less friction to go.

[Lyn Alden]

Yeah. And it's been fascinating to watch because like I, you know in Africa that some of the most populated countries are Nigeria and Egypt. They're in the both in the top three. And Nigeria obviously loves stablecoins. Bitcoin is very popular there. It's a very digitally savvy, savvy area. Egypt, both bitcoin and stablecoins on a kind of per capita basis, very Low interest. It's very much a physical dollar market. Gold's obviously very appreciated and just you have two countries and you just couldn't have more different views really. And so it's hard to say what makes something kind of capture the imagination of one place versus another. I mean obviously the biggest correlation is probably tech savviness. Generally speaking, if you look at when chain analysis will list the top 20 countries by their various metrics of how much they engage with bitcoin or crypto, it's usually countries that one, have some degree of a currency problem and two, but are also pretty tech savvy. The Nigerias, the Vietnams of the world rather than say the Egypt's of the world and more so than the ones that are really stable, that have kind of the least inflation.

[Interviewer]

It's really interesting. So putting this all, I guess in context to everything. I know nothing stops this train obviously, but do you think that the train is accelerated, decelerated or is moving steadily? We obviously have warsh coming in midterm season. I think the consensus that they're going to run it exceptionally hot here in advance of those midterms to try to win. How do you frame that?

[Lyn Alden]

So I think the train is basically flat to slightly decelerated. There's really no signs of major acceleration. Money supply is growing at a historically slightly below average pace. The fiscal deficits, obviously they remain above average. I think they're going to for the foreseeable future. One of the tariffs were a pretty big factor in that because 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. That's still, that's still going through the court system. We'll see what happens there. But in the grand scheme of things that only, you know, chips away at, you know, 10, 20% of the deficit. And so yeah, I think this year, well, I do think they're going to cut rates. I do think they're going to try to run things hot. Ultimately there's only so many levers that they have available to pull. Longer term rates are not directly in their control unless they do something extreme like yield curve control, which is not coming this year. And so I think we kind of run, I think the two speed economy is going to keep going, meaning that anything that's on the right side of AI or deficits is going to do pretty well. The long tail of other stuff is more of a mixed bag, I guess 12 months from now I think that'll still be the case. And yeah, I think basically we run lukewarm for the kind of foreseeable future.

[Interviewer]

So do you have any black swans on the horizon that could fundamentally change any of that? I think because markets are at an all time high and people can't figure out valuations, there's always this increased panic.

[Lyn Alden]

Right.

[Interviewer]

I mean we had the stock market literally at an all time high last month and I think the fear and greed index was 7 or something like extreme fear at all time highs.

[Lyn Alden]

Yeah, I mean right now we have near record low consumer sentiment while stocks are all time highs. The last time that happened was like the early 80s kind of that peak inflation period. So that's part of I think the two speed economy that we're operating under. I mean black swan. We're in a very, we're obviously in a very headline driven environment, a very headline driven administration. I mean, you know, a month ago we could have been talking about like Greenland for example or Venezuela, Venezuela or Iran. And like it's like, you know, these things. There's obviously a number of things that could just out of nowhere you get hit by a curveball war, financial war, re acceleration of some of these trade or tariff disputes. By definition a black swan, you can't really predict. But 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 what's fueling it. It's not, you know, high levels of bank lending, it's high levels of deficits. And I think that's the status quo that we're in for a while.

[Interviewer]

So saying the world's not about to end.

[Lyn Alden]

Hopefully not.

[Interviewer]

It seems like, you know, when I open Twitter, it seems like the world's about to end.

[Lyn Alden]

Yeah, we see like the dollar's going to collapse, China's going to collapse. XYZ is going to happen. A long enough timeline, everything happens. But on a, I think any sort of investment time, time horizon, I think status quo keeps going on for quite a while. Perfect.

[Interviewer]

Well, I really appreciate you taking the time to, to sit down. There's a great conference here at Bitcoin Investor Week and really look forward to chatting again in the future.

[Lyn Alden]

Happy to.

[Interviewer]

Thank you.

[Lyn Alden]

Happy to.