Natalie Brunell interviews Lyn Alden
Summary
Natalie Brunell interviews macro analyst and author Lyn Alden about Bitcoin's underperformance in the current cycle, the state of markets, and what lies ahead. They discuss why Bitcoin only reached $126,000 despite bullish expectations, the disappointing lack of retail participation, competition from AI stocks, and the challenging sentiment among long-term holders. Alden shares her views on precious metals, the gradual money printing environment, and the psychology of investing during uncertain times.
Key Takeaways
Lyn Alden considers this Bitcoin cycle disappointing, with the asset reaching only $126,000 against expectations of $150,000 or higher. The lack of retail adoption, competition from AI stocks, and absence of a broader crypto narrative all contributed to weaker-than-expected performance.
Precious metals had a remarkable run, with silver and gold surging dramatically, but Alden now sees them as less asymmetric investments than when they were near production costs. She views them as capable of either a 50% pullback or new highs, making the risk-reward less compelling than earlier in the cycle.
The Federal Reserve is expected to pursue gradual balance sheet expansion rather than a "nuclear print," with initial purchases around $40 billion in short-term Treasury bills. Alden argues that bank cash ratios remain relatively high and conditions don't warrant massive quantitative easing in the near term unless unexpected crises emerge.
Bitcoin sentiment appears worse than during the 2022 bear market, with long-term holders expressing unusual negativity. The absence of sovereign buyers beyond modest corporate and institutional adoption, combined with AI drawing investment attention, created a disappointing environment for Bitcoin bulls.
Diversification remains crucial even for Bitcoin believers, as concentrated bets can force selling during downturns. Alden recommends focusing bets on oneself through entrepreneurship and AI adoption rather than swinging for the fences with portfolio concentration in volatile assets.
Full Transcript
Lyn Alden: I think this has been a disappointing cycle, but I'd like to think that Bitcoin can still go up quite a bit. It's still a fairly small asset. We saw how gold and silver could move like they did despite being very large markets.
Natalie Brunell: Yeah. Haven't seen that for a while in Bitcoin.
Lyn Alden: No, I haven't seen that for a while. I still think it has upside, significant upside potential.
Natalie Brunell: Hey everyone, welcome back. The one and only Lyn Alden here with me. Lyn, thank you so much for joining me. Gosh, so much to talk about. I don't know where to start, but how are you doing?
Lyn Alden: I'm good. Thanks for having me.
Natalie Brunell: What a crazy market. The sentiment, I think, is worse than 2022. I've seen such negativity even from long-term holders. Are you feeling the same? Are you feeling like the negative sentiment is kind of taking over?
Lyn Alden: I do. I mean, at the bottom of the 2022 bear market at Pacific Bitcoin, the energy was actually really high. Whereas here, even before this kind of last leg down in price, it was already really weak. I think part of that's because in the broader crypto space there was no alt season to speak of and I think that whole industry's kind of run out of narratives in a way. I think that's probably a key thing that's different this time versus prior cycles.
Natalie Brunell: I heard you say on an interview that we really didn't see retail adoption in this last cycle. Why is that? I've totally noticed it myself because content's obviously impacted by that, but where's retail? Why are they not buying in?
Lyn Alden: Well, I think one, because there's been no bull market that was fairly weak. I think what attracts retail a lot of times is when you have an asset that's outperforming every other asset in the world and people say, "Well, I have to learn more about that. What's going on there?" But when you have RAM stocks soaring and GPU stocks soaring and other kind of AI-related things soaring, when Bitcoin is doing okay, when it was going over $100,000 it was a fine market but it wasn't like a unique thing, at least in terms of price action. So I think that was probably a downward force on getting retail in this time.
Natalie Brunell: I know that you were kind of disappointed with the price only reaching $126,000. A lot of people were predicting much higher. What would you say would be the maybe top two or three reasons we didn't get there?
Lyn Alden: Yeah, it's funny. I try to avoid price predictions, but I was on record saying anything under $150,000 would be pretty disappointing. We only got to $126,000. You know, it's hard to say exactly what the main reason is. I think one is what I mentioned about the AI drawing a lot of attention. And I'm not the first person to point that out. I think it's competing for attention with assets that are performing as well or better than it over the past few years. I think the precious metals bull run also kind of drew some attention. And like I said, the lack of any sort of broad crypto thing. Often as noisy as that is, it kind of gets a lot of people's attention. But other than meme coins and some kind of financial nihilism going on, there wasn't really anything happening there. And I think a lot of people have kind of heard about Bitcoin at this point. So I just think there wasn't, it's almost like there's a barbell. So the two sides didn't show up. Sovereigns didn't really show up. You know, people were talking about the strategic Bitcoin reserve a lot last year. I was on record saying I'm not going to expect that really.
And then the other side is retail didn't really show up. But instead, the only real players this time were kind of in the middle, the corporate institutional side, kind of higher net worth retail that have a brokerage account and the ETFs opened up to them, made it easier. But not really like a deluge of people buying Bitcoin, taking self-custody of it, learning about it, doing the whole podcast circuit. That was kind of absent this time.
Natalie Brunell: Well, I know a lot of people expected the volatility and upside potential to sort of dampen as institutions come in, but I feel like some people are now speculating whether it's really created an environment for suppression sort of on both ends where we can't get as high. There are all these derivative products. There's ETFs. People are shorting it. So we can't reach the peaks that we used to in more retail-driven cycles, but also maybe we're not crashing as low as we did in previous bear markets. Do you see that or how would you describe it?
Lyn Alden: Well, we'll see how low we get, but I think the larger the asset gets, the more liquid it is, the harder it is for any one entity to really move the price around. You know, not like one failed exchange. There's still some really big groups out there that own a lot, but for the most part, the bigger it gets, the less that's able to happen. And I think the derivatives part is inevitable, meaning that once an asset's this big, there's no world where we have a multi-trillion dollar asset that is kind of magically only owned by retail. Institutions are going to get in if it's successful. That's something it has to go through. I think that unlike gold where the paper games can go for literally years or decades because taking custody of it is so challenging and costly, those paper games go a long time until they break. With Bitcoin, because it can be tested so quickly, whenever there's kind of a whiff of insolvency, it's pretty easy to test. So I think those kind of derivatives and stuff, while they can kind of inflate supply for a period of time, I don't think that's the chief reason. I think mainly just the topline demand was kind of mediocre this cycle. And I think that played the biggest role in not having the explosive upside. I do think it's healthy not to have those kind of, say, a 20x run and then a 90% crash. That's just inherently part of a smaller asset that generally behaves like that. It's kind of remarkable watching silver behave like that.
Natalie Brunell: I was going to say we've seen that recently in the precious metals. And I would love to get your take because I feel like you were very bullish on them when no one else was talking about it and now maybe you're softening your stance a little bit. Where are you at when it comes to precious metals?
The Precious Metals Outlook
Lyn Alden: Yeah, I view them as just less asymmetric now. When you could buy silver for like $18 an ounce, it just kind of was at a period where it couldn't really realistically go much lower and stay there for a long period of time. There's plenty of industry demand for it and then there's also the monetary or speculative component that can happen too. So it's like, you know, I wasn't sure when it would take off but I was like I'm willing to let this go for a long time because the floor is pretty high and the upside is pretty significant. Same thing with gold and platinum. And you know, gold took off earlier, silver and platinum were disappointing until they kind of caught up all at once. But now after they've soared, it's more like I wouldn't be surprised by a 50% pullback or new highs again because it's just less asymmetric than when they're all kind of near their mining costs and when they're very underowned.
Natalie Brunell: So this is really interesting because it's where I think you and Luke Gromen diverge. And I have to say, I mean, my viewers already know, you guys are my two favorite analysts. I read your newsletters religiously. And Luke seems to be so bullish on gold that it's going to $10,000 maybe $15,000 per ounce, that the US has a strategy to revalue the gold in order to address our debt. You have much more of a moderate stance where again you acknowledge that we could see a pullback but you also wouldn't be surprised if it goes to five figures per ounce. Can you kind of define your take a little bit? Maybe your reaction to some of these other analysts that are predicting such wildly higher gold prices as we almost shift the monetary anchor from treasuries as the primary reserve back to gold?
Lyn Alden: Yeah, it's not that I disagree with him. I think it's just a matter of probabilities or timelines. I mean, I would not have guessed that we'd be at $5,000 gold roughly speaking right now. As someone who's long it, I'm happy we are, but I would not have, you know, if you asked me a year ago, do you think gold would be $5,000? I'd be like, well, no. So it can always surprise you on the upside. I think one thing that's worth keeping in mind is that $10,000 gold is only a double from here. Meaning that even if that view is right, and it very well could be, it's a double, right? So you're taking on downside risk if it drops back down to $4,000 or $3,000 an ounce. And that's, you know, offsetting the fact that it absolutely could go to $10,000. It could go to $15,000, but then you're looking at two or three multiples. So I don't disagree, it's just that asymmetry is gone. Now if gold does kind of revalue toward the kind of global central bank store of value, those are the types of prices that would make sense for it. I mean he's been really good at calling the gold to oil ratio specifically. That's absolutely played out. I think we're near record highs in that ratio, kind of ignoring the brief time oil went negative. Not all oil markets but certain oil markets went negative. So that aside, we're kind of near all-time highs. I think that's a perfectly valid thesis. It's just that, you know, when you're looking at a potential 2x or 3x gains, I think you can still spread out your bets to other things because there are plenty of things that can go up 2x or 3x on a multi-year time frame.
Natalie Brunell: Well, what has that asymmetry for you, that opportunity that you used to see in gold that maybe you now see in something else?
Lyn Alden: I see it in fewer places now just because we've already had, I mean, you know, we've gotten pretty high in the US stock market. We've already had precious metals take off and like I said, I don't know if we're at the top or not, but they've already taken off. You know, I'd like to think that Bitcoin can still go up quite a bit. I mean, it's still a fairly small asset. We saw how, you know, gold and silver could move like they did despite being very large markets.
Natalie Brunell: Yeah. Haven't seen that for a while in Bitcoin.
Lyn Alden: No, I haven't seen that for a while. I still think it has upside, significant upside potential. And then I go to corners of the market that just don't get a lot of attention like Latin American bank stocks and stuff like that. I mean, they were one of the best performers in 2025 and no one, you know, they're completely off the radar of anything. No one would have on their bingo card that during a trade war Latin American banks do amazing, right? You know the biggest bank in Brazil, the biggest bank in Colombia, they were up a ton. Kind of like gold and silver. I think a lot of the run is over now, but I still think that in that region and kind of parts of emerging markets, not all emerging markets, but I do think that they're kind of set up for probably a pretty good forward three to five year performance.
Stocks Versus Gold
Natalie Brunell: I recently did an episode where we discussed this capital rotation into gold and something was very similar to what you wrote in your newsletter about how we are in the fourth major bear market in US stocks relative to gold in the modern era. Can you kind of put that into perspective? So it seems like nominally things are going up. So stocks are performing well. We just hit, what, the Dow Jones, we've got the attorney general talking about how important that is. But in terms of gold when you start to price things in a different measuring stick it's not performing as great as it looks.
Lyn Alden: Yeah. I think anyone who kind of studies emerging markets sees this a lot more commonly than we see in the US, which is when an emerging market's in a recession or the economy is not doing great, often the stocks are getting new all-time highs anyway because the currency is so weak. If the money supply is growing by in those countries, like say 30% a year, it's hard for stocks to stay down in local currency terms. But when you look at how they're performing in dollar terms, they're usually not doing great in that kind of rough environment. In the US, we don't have that kind of rapid money supply growth. We don't have that kind of inflation. But our measuring stick is basically you can compare it to gold and say, well, nominally in dollar terms, the stock market's been doing fine. Obviously, parts of it have been doing really well, anything AI-related. But broadly speaking, it's underperformed gold for many years at this point, which is generally what you see when you have that kind of more debasement-focused type of economy. Because we had so much money supply growth, I mean, not recently, but it's still working its way through the system. Margins, you know, are kind of hit or miss across the board. We also have a record divergence or near record divergence. We have all-time high stocks, but then consumer sentiment is near its low end. And it's about as bad of a divergence as we've seen since the early 1980s.
Natalie Brunell: Which again, like in Egypt, for example, when they were going through massive inflation.
Lyn Alden: The problem doesn't show up in the stock market going down per se because in local currency terms, it often is doing fine. And it doesn't even show up necessarily in unemployment. It just shows up and everyone feels a little poorer. Like in Egypt for example, it's like how many hours of work does it take to buy the same car that it did three years ago? That's normally a higher figure for many of them.
Natalie Brunell: Right.
Lyn Alden: And I think in the United States we have a less extreme version of that which is people, you know, how many hours do they have to work to kind of pay for their annual health insurance premiums for example or how many hours do they have to work for various things? Obviously some areas, you know, software and AI, it's very productive, things can get cheaper, but in many parts of life, it's going up faster than wages. And so that, I think the stocks rolling over in gold terms kind of mirrors that environment.
The AI Boom and Infrastructure
Natalie Brunell: We were just at a Bitcoin conference, but a lot of the speakers on stage were talking about AI instead, and it seems like that's where a lot of the focus is, a lot of the investment has gone in the last year. But I'm curious your take on the space as we zoom out because it does require so much energy. It requires, you know, data centers that have all these inputs that have different prices that have obviously gone up. Again, I kind of go back to, are we going to be printing money in order to pay for the commodities that actually build what we need in terms of our infrastructure? And how do you think that'll all play out in this macro picture that's really quickly evolving?
Lyn Alden: I mean, good set of questions there. I think, I mean, right now, oil is still very cheap despite all of this, which is actually pretty interesting. I mean, that helps keep inflation down. Obviously inflation shows up wherever there's bottlenecks and power is not very fungible, kind of like how natural gas can have really big dislocations where, you know, one continent can have a natural gas price that is multiple times higher than natural gas on another continent because it's way harder to arbitrage that than it is with oil just because the transportation costs are so high. And power is a similar way which is, you know, you can't just magically teleport spare power to where there's a need for power. And so, you know, power is in demand and to some extent, I mean people were always worried about Bitcoin mining driving up electricity costs. This actually kind of does it because unlike Bitcoin mining, AI data centers, one, they want to have high uptime. They can pay quite a bit for power whereas Bitcoin miners have to find the absolute lowest cost electricity which means basically stranded either in space or time. And Bitcoin miners didn't really care about being near population centers. You know, give them Starlink and they're happy to mine in Antarctica for all they care. Whereas data centers for AI, all else being equal, they prefer being closer because it reduces their latency. So we actually do see an issue where they do compete with, you know, industrial and residential prices in many cases. I think whenever you have a rapid change there's dislocations. I think eventually the market figures it out. Eventually we probably have oversupply of all the things we're short on now. GPUs, RAM, power, data centers. We'll have a period of probably getting overbuilt. And then we'll contract and I think we'll go further from there. Just like how farmers got tractors and that made them way more productive. I think basically workers around the world are going to get AI agents and, you know, I think everyone's going to get way more productive even though it's obviously a very disruptive time as that comes online.
Natalie Brunell: It's been really interesting just to see how much more these companies, especially the big ones, have to spend on capex and those announcements being made that's also driving some of the market volatility as well. But to your point, I mean, the AI transition that we're going through is going to be fascinating because some people look at it with a lot of fear that it's going to create deflation and mass unemployment. And others say, "No, it's just going to shift the jobs, create new jobs that never existed before that we couldn't even predict, and we're going to be a lot more productive if we employ these new technologies in a great way." And maybe you have a perspective on Bitcoin because I even mentioned on Fox the other day that whenever I've typed into any of the AIs like what form of money is the best for, you know, your technology for AI, for agents to hold and store and send between each other and earn, they all say Bitcoin. Why is that?
Lyn Alden: Well, because it's permissionless. You know, they can spin up a wallet and just use it without anyone's permission. Whereas, I mean, an AI is going to have trouble KYCing for a bank account. And whether it's Bitcoin, I mean to some extent stablecoins as well if they want kind of shorter-term capital that they want less volatility with. Those just make absolute sense for AI to use. Microp payments can be super cheap. They can stream payments in a way that the fiat system can't still fully do. I think that's a natural fit for them.
And I think a key trend we're going to see, so in the 2010s, part of why the fang stocks and now called the mag 7, they got so big in large part because they could capture a lot of the economics. They had network effects, but then also they actually didn't require a ton of capex. I mean, there's still big numbers in absolute terms, but compared to how much money they were making was not a lot of capex. So they could plow it into buybacks and to lesser extent dividends and really kind of boost their market cap. The challenge now is that AI, they don't really have network effects. So they're in more kind of direct competition with each other. So it's more of an arms race. And it costs a lot of money to maintain which means I don't think a lot of the value accrual will be in these big companies anymore. I mean, they'll still be very large companies, but I think, you know, during the 2010s, we'd see a company go from $50 billion to, you know, $500 billion or more. And now I think actually the value is going to mostly be in people, which is to say instead of, you know, trillions and trillions of market cap kind of concentrating up in the corporate sphere, I think they're going to be absolutely kind of at war with each other in terms of capex, and then the winner is basically productivity. So the losers in that world are people that are not using AI that are kind of behind the curve on AI and the winners in that world are those that are kind of on the leading edge of AI that are either for their personal life or for their business finding ways to get efficiency gains out of that. So it's disruptive but I think that's ultimately a good thing. And value accrual still happens where there's bottlenecks, right? So for example, there's like, you know, two major GPU companies. There's only three major RAM companies in the entire world, three companies have like 90 some percent of market share. And so I mean obviously they're making an absolute killing in this environment. But whenever you have something where there's no kind of key bottleneck, right? So we've seen people can switch from ChatGPT to Claude for example once they find one that's better. And there's a little bit of a switching cost in terms of people have like their data in one and then have to kind of transition over to another one but, you know, there's not a lot of network effects or stickiness there. So I think actually consumers kind of win from this.
Reshoring and Economic Challenges
Natalie Brunell: I still think about the fact that you can't print some of these things, right? The data centers that they're going to need to build. You can't print the rare earth minerals. You can't print the energy. You can print the dollars. And I guess we have an advantage with being the reserve currency. But how are we going to get all of the things that we need actually built in the next 10 to 15 years if we're going to reshore like this administration wants when even on the software side things become obsolete kind of quickly, right? And we can't just put up one of these massive data centers within the span of a year. It takes so much time. So do you feel like that's going to also create some geopolitical issues and conflicts because so many people have pointed out that we really don't have leverage or access to some of the very materials and inputs that we most need?
Lyn Alden: Yeah, the short answer is I don't think we're going to reshore materially over the next 10 years. It's just a very uphill battle. I mean, even in the first year, right? So, we're a year into quote unquote reshoring. US manufacturing jobs are slightly down over the past year and industrial production is flattish, roughly flat over this period. And of course, that's only one year. So, you know, we can say, okay, what happens in the next nine years? But the forces of economics just like you said, there's a lot of things that have to be built. And now you have data centers competing with manufacturing facilities. They all require power. They all require, you know, construction labor. They all require all the physical inputs. And without it being a top-down approach, it can only get you so far, right? You can create the incentives to make things happen. You can even do stimulus to try to make things happen. But it still has to make economic sense for individual companies to want to do stuff. And so far it just hasn't. So I think reshoring, you know, I think we can potentially pull some of it back, maybe some more critical stuff. But I don't really see us kind of significantly reshoring our supply chains. Nor is it necessarily the goal to do. You know, obviously you want to have access to key stuff you don't want to get cut off from, but like textiles for example, it's very much fine to let that be made elsewhere. And I think having data center capacity is obviously far more important, right? And you can't really have it both ways, right? Like they want a strong dollar, but they want to reshore. You can't have both.
Natalie Brunell: Um, so let's talk a little bit about the nothing stops this train because I think that obviously they're going to need to print in order to finance these deficits and if we're going to try to reshore they're going to run the economy as hot as we can. They're trying to focus on the growth side. But so many Bitcoiners are waiting for a big print or a nuclear print. And as you write, you're more expecting a gradual print, which Fed chair Jerome Powell, who's on his way out, he kind of alluded to, we're going to slowly expand the balance sheet. It's going to initially start at what, $40 billion worth of purchases, short end Treasury bills. I mean, that doesn't sound like anything mind-blowing. I think you said that a big print would have to be $2 trillion plus or more of expanding the balance sheet. So why gradual for you?
Gradual Versus Nuclear Printing
Lyn Alden: Mainly because the conditions are not such that they would need a big print in the near future. I mean unless something unexpected happens. Like I mentioned in that piece, if a worse type of war breaks out or if there's more kind of financial war going on. There are scenarios that can absolutely result in a big print or a nuclear print. But when the really big numbers happen, like the QE1 happened at a time where banks were extremely levered. They had very little cash relative to either their total assets or relative to their deposit base. That was kind of peak long-term debt cycle in the private sector. And so you start from a tiny base and you go up to pretty big high cash ratios. Now I mean bank cash ratios are still pretty high. And as long as you don't have something like COVID scale disruption to the economy, which, you know, can always happen, but it's not my base case, then I wouldn't really see printing of that magnitude happening. Now you look out far enough, anything can happen, but when you have like say a one to two-year starting point for analysis and say, well, what's going to happen in that time frame? They've kind of hit the rough floor for how much cash they can take out of the system. There are some levers they can pull if like for example the new chairman does try to get the balance sheet down unlike Jerome Powell, but I think they'll be limited in that. And just right now when you kind of run the numbers of how much debt is coming out, how much money supply is growing, how levered or unlevered banks are, they just don't really need a lot of printing. A little printing gets them a long way. The Fed can buy a little bit of the bonds and then also as that expands the size of the banking system they can also buy bonds on fractional reserves. So I think that the system is going to go on for quite a while in a state that doesn't need massive massive printing.
Natalie Brunell: So do you think that the analysts that are calling for this are just wrong or maybe on a different time horizon like eventually something will break and eventually we will just need a big print because it seems like over the past decade or so at some point we just go back to QE.
Lyn Alden: I mean it would depend on the analyst. Sometimes they give their time frames so we can just see if it hits that time frame or not. Yeah, depends on who we're talking about but I think basically there are those who just don't follow the financial plumbing very closely. So every kind of downtick in stocks or every kind of downtick they say well the, you know, we're going to have to print soon. But really the Fed only cares mainly about the liquidity of the treasury market and the interbank lending market. Even stocks going down 10, 20, 30% is not really going to be a catalyst for the Fed to print or other central banks to print. Now obviously, you know, if you're the president and that happens, you might want them to print. But as long as basically unemployment's not ticking up, I don't think they're going to be doing massive QE anytime soon. And then even if they do get, you know, if unemployment goes up because of AI, Fed tools are very limited at dealing with that. Now, if Congress decides to pass some $5 trillion, you know, AI stimulus, basically UBI equivalent like, oh, robots took your jobs. Well, here's, then sure, but that has to go through Congress. That'd be a very polarized environment. So it's not on my one to two-year time frame, something like that. We could absolutely see a half a trillion dollar stimulus or something like that. But again these are not giant numbers compared to what really moves the needle in terms of balance sheet. The stock market in the US alone is tens of trillions of dollars. So it takes pretty big numbers to really impact things from a macro scale at this point.
Natalie Brunell: Yeah. You had some shocking statistics. I know I've read them before, but every time I do, it's like stock market's 200% of GDP. 90% of stocks are held by the top 10%, the top 10% of society, and the top 10% does nearly 50% of consumer spending. I mean, we're just so top-heavy in terms of everyone else feels like they're struggling. And so, no wonder it trickles into these societal issues. I think we have more civil unrest and people just growing so frustrated and then you compound it with AI fears and no wonder we're like a powder keg. Do you see it that way?
Lyn Alden: I do. I mean that's, I mean political polarization grows when you have fiscal dominance. And then polarization can actually make it worse. And these things feed on each other and it's hard to know where it ends up. You know we, in developed countries we have to go back to the 1940s to find the last time we were really in fiscal dominance. And it was a very different time back then. So I do think that, yeah, I think that societal unrest is probably going to continue unfortunately into the 2030s. I mean the combination of top-heavy demographics, AI fears, AI opportunities but also fears, and then this, you know, a financial system that has kind of, it's geared toward rewarding those who own assets, short fiat currency and have the runway to kind of let that play out for years and decades. And it's obviously been hard for anyone who mostly makes their money with time and they're not very asset heavy. And you know, we've even seen just some recent speeches where it's like they don't even want to necessarily get house prices down. It's like they'd rather optimize for the older wealthier class that has them rather than making them available for younger people, new families. It's a powder keg like you said.
Natalie Brunell: You wrote that dividends are at a record low. Why is that?
Lyn Alden: Dividend yields are at a record low. Two reasons. One, just valuations are pretty high. So, you know, even if a company's paying out a pretty high percentage of its cash as dividends, I mean, if their stock's trading at like 50 times earnings, it's going to have a low dividend yield. And then two, buybacks are popular. So, if you go far enough back in the data, it was way more dividend focused and way less buyback focused. Now, buybacks are a pretty significant component. So we're roughly on par, the bottom in dividend yield of all time is like the dotcom bubble and we're kind of back down to that like a little over 1% average dividend yield for the S&P 500.
Natalie Brunell: So crazy.
Lyn Alden: Whereas yeah, in the past I mean there were decades where it averaged 4%. Obviously there were some really cheap times where you could get like a 7% average dividend yield and right now it's down to one. And that's also, you know, when you do that stock versus gold comparison, most of those charts leave out dividends, which means over a very long period of time, even though it might look like a sine wave, it's actually stocks just completely crushing gold over, you know, 50, 100 year period. But in this current kind of bear market of stocks to gold, even with the dividend, because the dividend's so low, it really has been a bear market in stocks versus gold for quite a while.
Natalie Brunell: Yeah, it's crazy. Gold has been outperforming S&P even with those dividends. So, what does the gradual print mean for Bitcoin?
What the Gradual Print Means for Bitcoin
Lyn Alden: Not a ton, I think. I mean, it's supportive all else being equal, but Bitcoin still has to compete on its own merits for investor attention. So, you know, basically it has to compete with Nvidia. It has to compete with other AI stocks. It has to compete with everything out there that people can own. And of course, the advantage Bitcoin has is that you can self-custody it. You can't self-custody your stock, your Nvidia stock. But then the question is how many people want to self-custody it? How many people want, you know, self-custodial hard money? Historically, it was the gold bugs. Now it's gold bugs and Bitcoin maxis. And the question is how big is that market and what timeline does that happen on? I'm optimistic, but I wouldn't really point toward the gradual print as a catalyst, per se. I do think that the shift from balance sheet contraction to balance sheet expansion is relevant for many assets including Bitcoin. But when you only have a gradual print scenario, asset specific things matter way more than the macro backdrop. If you have a, you know, spring 2020 scenario where just this crazy stimulus is happening then almost the micro doesn't matter at all. It's all macro at that point, just hyper stimulus. Everything goes up basically. Whereas if you have more of a kind of a lackluster macro backdrop, then asset by asset really matters. All that micro matters.
Natalie Brunell: Where do you think capital is going to come from in order to maybe push Bitcoin to the upside and what markers are you looking for for maybe a Bitcoin bottom to be in?
Lyn Alden: I think initially kind of the diamond hands put the floor in, which is to say that the fast money gets out, the coins rotate from fast money hands to strongly held hands that are really not going to want to part with it unless it goes up like 5x or more basically, that kind of buyer. And then eventually just it tightens supply and that it only takes a marginal amount of new demand to come in. It could be, for example, that the AI stocks eventually just peak. They get so silly big that they can't really get realistically much higher. And then Bitcoin's cheap for a while and it's in strongly held hands and people start to notice that, hey, it's going up again and it's underowned and no one's talking about it. And then, of course, bull markets kind of feed the narrative after that point, kind of like we saw in precious metals where once it starts running, then people hop on. I don't think we've seen the end fully of the treasury company buying spree, which is to say that, you know, obviously I think some of the mergers and acquisitions we're not going to see at the level that we saw in 2025. But I think some of them will still be buying in the years ahead, like Strategy and others. And then when you do have that rising environment, people look around and say, well, where can I lever that in the least risky way? And they might look at some of the treasury companies and bid those up and if they get a positive market cap to net asset value they can buy. So I think that that's kind of part of the bull markets going forward.
Natalie Brunell: But you do think that there's more downside risk that we haven't put in a bottom necessarily.
Lyn Alden: I mean I started back in December and January I was working with the assumption that November bottom, you know, might be the bottom. That was kind of my base case but we invalidated that case. Historically, Bitcoin rarely makes V-shaped bottoms outside of say like COVID stimulus type of events. Normally it hits like a low level and then goes sideways for quite a while. I think we're in more of a grind, but a grind could literally be $10,000 lower or it could be $20,000 higher and it's still in that grinding part. So I don't really have kind of foresight on exactly where it's going to bottom. I just think it'll be a process that takes time.
Natalie Brunell: You did a report with Sam Callahan about how it's normally correlated to M2 and liquidity, but I feel like liquidity and M2 have been at record highs and we saw a divergence. Can you talk a little bit about that and how often we might see those divergences and why?
Lyn Alden: Yeah, in that report, I mean, off the top of my head, I think it was 83% of the time it goes in the direction of liquidity and the other 17% it doesn't. The most common reason it doesn't is because of valuation. So when you have a very high, let's say market cap compared to average cost basis. So you have a very big disconnect. You're more likely to get a divergence where liquidity and money supply are still going fine and Bitcoin's selling off just because a bubble can't necessarily, a local bubble can't be maintained just because liquidity is still decent. This has been one of the 17% of the time where it's kind of gone in different directions. I think in large part it's because of that shadow of AI that there are other things for that liquidity to want to go into and then there are, I mean there are other proprietary measures of liquidity you know like Crossborder Capital for example, they've got their own more proprietary data. For our article we wanted basically publicly available data which comes with limitations whereas if you have a proprietary indicator it's hard for other people to go check it but it can potentially yield more accurate results and for example he's been arguing that liquidity is not going up right now that it's actually more strained than it looks and that's certainly possible. There are still a number of central banks that are reducing their balance sheets. The kind of the tightening of the Japanese bond market is a downward force because they're a major creditor nation. So we're not really in an explosively positive liquidity environment. There's some debate about how good or bad it is. But it's not amazing. And like you know some of the more risk-on things you see like when purchasing manager indices are going up when the economy is kind of raging, we don't really see any of that in this period of time either. So a lot of assets that are outside of the AI sphere are kind of grinding. And you get random winners and random losers like Latin American banks somehow doing amazing, AI stocks obviously doing amazing, and other things not. And then lately, Bitcoin's been correlated to software stocks to an unusual degree and those have been selling off.
Natalie Brunell: Yeah, they've been selling off. I think, you know, somewhat rationally but I think eventually they'll get oversold and there'll be buying opportunities and then it's possible that the algos just jump on, you know, the trading algorithms say well Bitcoin, software, right, and then they kind of trade in sympathy with each other.
The Bull Case for Bitcoin
Natalie Brunell: Well I think we've had a lot of negative narratives lately, everything from quantum is going to break Bitcoin, obviously the AI stocks became suddenly more interesting, Epstein files and connections to Bitcoin that people latched on to. I just feel like a lot of people have felt like there isn't a clear bull case anymore. So, if you were to make it, what would it be?
Lyn Alden: I would say there's two parts of the thesis. One is that a decentralised ledger is valuable. And that it's more valuable than say its current 2% of global assets. You know, people can debate what that number is. A bull would say whatever number it is is higher than 2%. You know, 2% is a 10x, 20% gets you to 100x. So, it's like, okay, well, if you're higher than 2% on the kind of the total adjustable market, then there's a bull case, at least over many years, not any given six-month or 12-month period. The second part is basically arguing which one then, you know. A bear might say, well, they'll fracture and there'll be 10 different popular ones and none of them will get big. Someone who focuses on network effects however will generally argue that, you know, basically that one is going to win, basically Bitcoin. And that part of the thesis has been strong lately. I mean we had basically no alt season outside of little pockets. The second biggest cryptocurrency has not made a new high in Bitcoin terms since like 2017. It's only 20% the size of Bitcoin. So I think Bitcoin 17 years in is firmly kind of winning that network effect and security argument. And the part that still remains challenged is that topline demand. You know, what is the level of demand for a decentralised ledger? I would argue that it should be higher than it is now but obviously the market has disagreed. There just has not been a lot of buying pressure. And I think, you know, people like to point out how often it took the internet to catch on and then Bitcoin catching on quicker. Well, that narrative is damaged because AI just came and, you know, people could see right away how this could potentially help them. And a lot of people, because Bitcoin's kind of use cases are often not needed immediately, right? Obviously, some countries, it's needed immediately or someone gets debanked, they're needed immediately, but for a lot of people, it's more like insurance where they don't really necessarily even know they need it. And I think that kind of slows down its adoption. So I think the thesis is still sound that a decentralised ledger is attractive and probably worth more than 2% of global assets. And certainly that second part is stronger than ever, that kind of the fact that Bitcoin is kind of unique in this regard compared to the long tail of other cryptos. But that topline demand has just not been here this cycle.
The Psychology of Investing
Natalie Brunell: I think you made a really interesting point because I have been in the space since 2017. A lot of folks that I've met came in way before and got in, you know, at these crazy prices. I can't even imagine mining it earlier, buying it at tens, hundreds. I'm like, how could you, you know, you bought Bitcoin at $100 per Bitcoin? I can't even imagine it. But a lot of us also came in at the point where we didn't have enough to buy a significant amount that would make a huge difference in your life, unless Bitcoin were to suddenly 100x. And so there's almost been this bifurcation, I think, where you have the early folks who they're kind of fine either way at this point. They've made it. They were early enough and wherever Bitcoin goes from here, they're sort of set. And then the majority of the people, especially the ones that I've seen attending the conferences, it's like they're waiting for that. They're hoping that they become that next cohort that now they don't have to worry so much about their financial security. And to see Bitcoin do sort of a round trip right from the all-time high in 2021 back to it five years later. I've talked to people who are like, I don't, this is a lot, the roller coaster of the volatility. I could have put my money in other assets and outperformed. Like, I just don't get it anymore. What do you say to them? Because it has been, I think, for a lot of people, really disappointing.
Lyn Alden: Well, I think it's true. I think there's really no way around that. You know, we've had kind of two semi-disappointing cycles. So, the one cycle only got to $69,000 and then this one only got to $126,000 so far. I would go back actually to diversification. I mean, it's unfashionable when Bitcoin is soaring, diversification looks really stupid. You know, when Bitcoin does have one of those 10x moves, it's like, wait, you own stocks and gold too? But then when you have a flattish period, especially, you know, in a portfolio that rebalances and stuff, you kind of lean into those weaker moments. And then naturally you're not putting as much capital in when it's in its kind of peak phases. So, you know, kind of my approach and kind of what I've generally recommended is that, you know, you can own your favorite asset but that there are other assets worth owning too and that actually in some ways that makes you stronger at holding that asset because you're not banking everything on one asset in one time frame going up to, you know, fulfill your goals. You're saying, "I'm gonna spread my bets out." And so that way when Bitcoin goes down, if someone only owns Bitcoin, they could ironically have to sell despite, you know, being so convicted. Whereas if someone is spread out, at least to some extent, they can still, you know, place pretty heavy bets on areas that they really, you know, have high conviction on, but by having that bulwark of other assets, they don't have to think about selling during periods of weakness and they have more of the dry powder to, you know, shift one asset into here or shift assets around because they have that flexibility. So I think in bull markets diversification is unfashionable but in bear markets we're kind of reminded why, you know, you can have a portfolio and think well I'm disappointed that Bitcoin didn't do well but silver traded like a rocket ship so it kind of takes away some of the impact and that's the advantage of diversification.
Natalie Brunell: Right and stop caring what people say on social media because I know that there are a lot of people who say you can't diversify but going back to what we talked about at the beginning with sentiment, it does feel very different from 2022. I mean, I don't know. I felt like even when it tanked to $16,000, it was so isolated to FTX and sort of the crypto blowout that there wasn't any sort of concern from Bitcoiners. And now something does feel different. I guess maybe because people thought that with the Wall Street legitimisation and the ETFs and a very bullish Bitcoin president and the strategic Bitcoin reserve that we would be so much higher and it does create some cognitive dissonance because I am someone who I think and I don't know if I represent some of the people listening to this but when you're behind for so long or at least you feel behind for so long you kind of have to put all the chips on the table right? You have to bet big or you're never going to kind of achieve what you want to in terms of your economic goals. But that does put you in a position where you feel sometimes vulnerable when you watch your net worth go up and then down so hard that the psychology of that investing is not something easy. And as someone who has been investing as long as you have and you do kind of trade in and out of different assets and you share that with people in your portfolios, do you have any advice for the psychology aspect? I mean, obviously diversification is one of the tools that you recommend, but anything else just in terms of if you're starting to feel concerned or nervous about your investment, maybe you went a little too heavy into it essentially.
Lyn Alden: Yeah. I would recommend caution with that approach of feeling that if someone's behind, they have to bet riskier because that's also the same mindset that people will then use to buy the riskiest, junkiest altcoin out there.
Natalie Brunell: Yeah.
Lyn Alden: Because they're thinking, well, Bitcoin can only go up, you know, a certain amount, whereas this no-name token could go up 100x starting from such a tiny base. And of course, in the long run that breaks dreams.
Natalie Brunell: Yeah.
Lyn Alden: Someone of course can get lucky or be in and out but there's a financial nihilism aspect that is enticing but I would recommend most people against it. The slow and steady really does kind of pay off and the parts that bet big I think are more on yourself meaning that if someone feels behind they want to get ahead, there are other things outside of investing that they can do to try to kickstart it. It could be starting a business, for example. It could be like we talked about, you know, I think the winners are going to be those that are kind of using AI well. I mean, the world's never been more available to someone. You know, if your problem was, you know, how are you going to afford employees? Well, AI agents are cheaper. There's plenty of tools available when people kind of have an idea. And I think that's if someone's going to try to really swing for the fences, it's on themselves. And I think your portfolio, you don't want to necessarily swing for the fences with it. Now again, I still think taking concentrated bets does make sense, but you know, concentration could be, you know, in a super volatile position that you normally only put 1% in, maybe put 20% in, right? But it's still not, you know, 90% as some people do. So it's just a different approach compared to I think many.
Natalie Brunell: Well, yeah. And some people are facing that right now. It's like, do you sell when it's nearing a bottom, right? And to diversify, no, you obviously want to sell at the top, but trading is, it's so challenging. It really is. I mean, I saw analysts say around October, you know, we're reaching a frothy area, but you're always afraid that you're going to sell and it's going to all of a sudden go out of reach for you. But it's just such a fascinating industry because in Psychology of Money, the author Morgan Housel writes about how everything else, you know, requires more of a science. It's like a PhD that's building a bridge, an engineer that has a certain skill set and background. But with financial investing, it's kind of just an art in a way. It's feeling based, it's psychology based, and you can't predict human behaviour. And sometimes when we think it's going to run up, it actually crashes. And vice versa. You could have a janitor outperforming an MBA and it's just so fascinating. So I just thought that was an interesting takeaway. Any final thoughts?
Lyn Alden: Well, I think that to comment on your last point, I think that that's what makes investing and macro so interesting is that I approach it like a chess game but then where the rules slowly change over time. So you can't just kind of master one set of rules. The rules shift. So you're never, you never solve the puzzle. The puzzle is always evolving and you're always trying to keep up with it. That's what makes it so fascinating. And of course, the rewards are pretty big if you can get halfway decent at doing it. I think kind of to finish up, I would say focusing on Bitcoin, I think this has been a disappointing cycle. I would be careful about latching on to new narratives, even though I do think that there are always new relevant narratives. Like I do think that the narrative about, hey, AI is, you know, the best money for AI, AI is digital money. So things like Bitcoin and stablecoins. I think that's absolutely true. I wouldn't look for the next narrative to save it though. It's more about ultimately do people want to have self-custodial portable undebasable savings or not? And what percentage of people do and in what context will they want that? There's a joke that we need more podcasts. And there's some truth to it which is basically the tools are built now. There's really good solutions for, you know, private savings, permissionless payments. There's tons of really good tools out there. And people have to one, realise that they exist. Two, see how they can help them. And then three, actually use them. So I think still education is a key part.
Natalie Brunell: Well, I like the way you put it. You're a bearish bull, right? Ultimately, I am the same way. I try to be a little cautious and careful. Before we wrap up, you shared something on Nostr. I was curious if you might want to talk about it. Something releasing in March. Anything you want to share?
Lyn Alden: I have a new sci-fi book coming out. Yeah.
Natalie Brunell: Which I've read, by the way. It's phenomenal and I'm so excited. I can't wait. Just what's it about or you want to share anything?
Lyn Alden: Near future. So, it's not like a space opera. Near future. It's a world of VR. Bitcoin does make a presence in it, even though it's not a Bitcoin book, but it's the future, and I think Bitcoin will exist in the future. And basically, I won't give away the full thing, but the core of it is basically that kind of an extrapolation of where we are now, which is AI kind of taking over the internet in many ways. It's very hard to verify anything. And then it's like what happens if an extreme event actually happens but no one really believes it or no one really looks into it because it's so easy to just kind of misdirect people to another thing and then what is someone willing to kind of do to break out of that type of environment.
Natalie Brunell: Well, it's incredible and I'm so excited for the world to read it. You're a fantastic writer whether it's your newsletters, Broken Money, which everyone needs to read, or this fiction book. So I'm super excited for the world to get it. Thank you so much for joining me, Lyn. It's always a pleasure to talk to you and please remind people where to get your newsletter.
Lyn Alden: People can go to lynalden.com and they can check out Broken Money on Amazon or elsewhere. And thank you.
Natalie Brunell: Yeah, make sure to get both. Subscribe. Thank you so much, Lyn.