This is Not Bitcoin’s Cycle

With a new cycle seemingly underway, there are legitimate concerns around Bitcoin worth considering, and I do not just mean quantum vulnerability.

I, and it seems some others on the timeline, have been turning over the possibility of BTC underperformance this coming cycle, similar to how most alts failed to make meaningful new all-time highs last cycle.

With Bitcoin already ripping higher, you may think me crazy. But hear me out.

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Bitcoin Is Mainstream

Last cycle was, more than anything, about “mainstreaming” Bitcoin.

It kicked off with the approval of spot ETFs, which opened Bitcoin to institutional capital and did so with tremendous success, as BlackRock’s IBIT became the fastest ETF ever to reach $10B in assets. Then we had Trump run, and win, on a platform that included creating a Strategic Bitcoin Reserve, another catalyst that helped push Bitcoin through six figures. Meanwhile, we had Saylor buying millions of dollars of BTC each week, a shopping spree that inspired other companies to become digital asset treasuries and join him in these weekly purchases. The point is that Bitcoin spent the cycle dramatically expanding the number of people and institutions that could own it. No other crypto asset received anything close to this breadth of support, in or out of the markets.

I struggle now, though, to see who is left to join in. The DAT trade has largely fallen apart. The BSR has mostly come and gone, with the government so far relying on seized BTC rather than making outright purchases. Those who want to buy Bitcoin can already do so through ETFs. I do not mean that the bid disappears, only that opening these channels was itself a catalyst, and one that cannot simply be repeated.

Instead of entering this cycle with another massive pool of buyers waiting to be unlocked, Bitcoin faces some uncomfortable headwinds. Most unnerving to me is the unresolved quantum question, where a sufficiently powerful quantum computer could derive private key from public key and spend the Bitcoin that address controls controls. Yes, Bitcoin developers have proposed defenses, including BIP-360, but there is still no adopted network-wide migration.

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Then we have the overhang of Strategy, which Saylor is attempting to maneuver like an actively managed fund, balancing Bitcoin holdings against shareholder demands, preferred dividends and debt payments — no longer simply doing everything in pursuit of “stacking sats.” Strategy has already sold BTC to fund distributions, while management itself now describes the company as moving from one-way issuance toward “active capital management”. If anything, Strategy provides the perfect transition into the more difficult problem Bitcoin faces: a cultural one.

Bitcoin’s Cultural Problem

Bitcoin was born as money outside of the traditional financial system. Now fund managers gobble it up, repackage it, charge a fee and sell the exposure back to investors. There is an obvious benefit to this. I like being able to buy Bitcoin in an IRA. But there is also something undeniably strange about watching the financial system Bitcoin was designed to route around become one of the primary ways people access and profit from it.

Sixsmith, whose recent piece helped kick off this train of thought, recently put the cultural critique more sharply: “Bitcoiners started to believe that bitcoin had already achieved the mission and then they sold out.”

I believe this view is more widely held than many may realize, and that Zcash’s outperformance is symptomatic of it. David Hoffman made a similar case around Bitcoin’s institutionalization dulling its cypherpunk edge: Zcash has the same basic monetary foundation, including a 21 million supply cap and proof-of-work, but adds native privacy, something Bitcoin has never meaningfully achieved and something that arguably makes Zcash more resistant to being absorbed into the traditional financial system in quite the same way.

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It has also been more willing to confront quantum directly through Tachyon, its proposed next-generation shielded protocol, which is being designed to open a path to post-quantum privacy.

Considering this backdrop, I would not be surprised to see standout reflexivity from Zcash: the more it appreciates, the more people question Bitcoin; the more they question Bitcoin, the more capital moves toward Zcash, and on and on. I think Zcash may surprise people with how much of Bitcoin’s monetary premium it can capture. Hopefully, that competition also scares Bitcoin’s developer community into addressing quantum with the urgency it deserves.

— (@)

Alts Finally Have Fundamentals

But I do not mean to simply disparage Bitcoin. There is an equally compelling case for alts, which can, in some respects, simply be reduced to this: they have matured.

We really have Hyperliquid to thank for demonstrating how much fundamentals supporting a token can matter to its trajectory. Crypto now has businesses generating serious revenue, and many of the leading ones have made routing that revenue back toward their tokens a priority. Hyperliquid is the archetype: roughly 97% of protocol fees flow into HYPE buybacks, with cumulative purchases already well above $1B. As Evan_ss6 shared in his latest article, buybacks have become big enough of a trend that the Financial Times now tracks them.

Beyond that, Uniswap uses protocol fees to buy and burn UNI, while Lighter routes all of its revenue into LIT buybacks. Aave automated its buyback program last year, and Pump.fun is also actively buying back PUMP. Ethena is in the process of implementing its own.

The result is something crypto historically lacked: tokens tied to businesses where greater usage can actually translate into greater token demand or reduced supply. And these businesses still have enormous room to expand. The CFTC has already opened a path for crypto perpetuals to reach U.S. customers through regulated venues and intermediaries, while the SEC’s new Innovation Exemption permits limited onchain trading of rights-bearing U.S. stocks through permissioned AMMs.

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Products that were inaccessible or legally uncertain for U.S. users last cycle are beginning to open up. That gives businesses like Hyperliquid, Lighter, Uniswap and others something Bitcoin increasingly lacks: genuinely new markets to grow into.

And I am not talking about every alt. The opportunity increasingly looks concentrated in the “good” ones: businesses already generating meaningful revenue from products people actually use, with mechanisms connecting that success back to their tokens and large markets they have barely begun to penetrate.

That is ultimately the thesis. Bitcoin does not need to crash. It can appreciate considerably and still underperform. But while last cycle revolved around Bitcoin, this cycle may much more revolve around the handful of assets whose addressable markets are expanding now.