Lyn Alden said Bitcoin faces its weakest investor confidence of the current market cycle

Macroeconomist Lyn Alden has stated that Bitcoin is experiencing its lowest level of investor confidence so far in the current market cycle. Renowned for her research on Bitcoin, Alden emphasized that the long-term success of the asset should not depend on external support, but rather on its own core characteristics.

Investor sentiment weakens, cautious expectations dominate

Speaking in an interview with Natalie Brunell, Alden remarked that she does not expect any new external catalysts to propel Bitcoin higher at this stage. According to her, Bitcoin’s resilience will depend on its structural features—liquidity, permissionless use, and its function as a store and transfer of value.

She went on to note that the recent downturn feels noticeably different from when Bitcoin dropped to $16,000 in 2022. At that time, she observed that investor interest remained more robust, whereas today, weakened narratives, a more sharply defined market structure dominated by companies, and widespread investor frustration have come to the forefront.

Given this context, Alden’s main scenario for the year does not foresee Bitcoin reaching a new all-time high. However, she did not completely rule out the possibility of a sharp upward move, given Bitcoin’s volatile nature. In the short term, the absence of new lows and a technical outlook that turns sideways or gradually upward are regarded as positive developments.

Pressure mounts on Strategy’s approach

With institutional adoption and corporate treasury strategies involving Bitcoin becoming significant themes in this cycle, attention has once again turned to companies like Strategy, the world’s largest corporate holder of Bitcoin. Earlier this week, Strategy disclosed that it had sold 3,588 BTC, amounting to a total value of $216 million.

Alden highlighted that, during downtrends, investors are scrutinizing the company’s Bitcoin-backed capital structure and preferential share products more carefully. She observes that, for investors seeking indirect exposure to the company’s Bitcoin strategy without holding BTC directly, instruments like STRC offer a specific function.

Glossary: STRC is one of Strategy’s preferred share products. Preferred shares often provide different returns and privileges compared to common stock and can give investors indirect access to certain strategies without having to hold the underlying asset directly.

She also commented that the company’s recent measures to enhance collateral structures and introduce further safeguards are reasonable. However, she cautioned that the effectiveness of these protective steps will ultimately depend on Bitcoin’s future price movements.

Debate over Bitcoin protocol changes met with caution

Alden also touched on the discussions regarding Bitcoin Improvement Proposal 110, or BIP 110. This proposal aims to limit high-data-volume transactions—including those used for visual storage—reducing undue congestion on the Bitcoin network.

Glossary: BIP stands for Bitcoin Improvement Proposal, the official process for introducing technical changes to the Bitcoin network. Such proposals undergo rigorous technical evaluation by developers, users, and ecosystem participants before implementation; they are not adopted automatically.

Alden explained that she generally approaches rapid changes to Bitcoin’s rules with caution. Some proposals, she notes, could make the network more complex or impact existing security mechanisms. She advocates for careful analysis of both the technical arguments for and against any protocol modification.

She also expressed criticism about how some proposals are publicly presented. Alden believes framing protocol changes as existential threats for Bitcoin may overstate their significance and does not provide the right perspective for public debate.

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