- Bitcoin’s historical trend: Consistent rebound after significant drops.
- Institutional shift: Recognition of Bitcoin as a long-term uptrend asset.
- Normalization process: How repeated high peaks reshape the narrative.
In a recent interview, renowned macroeconomics expert and author, Lyn Alden, expressed a divergent viewpoint on Bitcoin, asserting that traditional financial institutions are gradually veering away from the notion that Bitcoin is ensnared in a classic bubble. Alden delved into an analysis of Bitcoin’s price movements over the past 15 years, emphasizing a recurrent cycle that has repeated itself three times, where the cryptocurrency experienced significant drops of 75% or more, sometimes exceeding 90%, only to subsequently attain higher levels.
Speaking with Peter McCormack, Alden underscored the uniqueness of Bitcoin’s historical data, noting that very few stocks have demonstrated this pattern, with none surpassing three instances. She highlighted the rarity of such a phenomenon, emphasizing that if Bitcoin were to achieve another peak, it would mark the fourth occurrence. However, Alden acknowledged the prevailing narrative among the general public, stating that most people have only witnessed two cycles, namely the surge and crash in 2017 and a similar pattern in 2021, leading them to perceive Bitcoin as a bubble that inflates and inevitably bursts.
Alden contended that institutional perceptions of Bitcoin shift when they take a closer look at its extended history of recording higher and higher lows. She argued that these institutions begin to recognize Bitcoin as an asset engaged in a long-term uptrend rather than a conventional market bubble. According to Alden, institutions are gradually acknowledging the strength underlying Bitcoin’s market, which becomes apparent after witnessing a third high peak and a third low trough. This, she believes, contributes to the normalization of Bitcoin among institutions, making discussions about the cryptocurrency less eccentric.
The macroeconomics expert dismissed comparisons of Bitcoin to historical bubbles, such as the infamous tulip bubble, by pointing out that unlike these bubbles, Bitcoin has consistently rebounded to higher levels over a span of more than 15 years. Alden emphasized that as Bitcoin’s resilience becomes increasingly apparent, the asset is shedding its association with traditional bubble characteristics, making it more acceptable and normalized in the eyes of institutional investors.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.