Could Bitcoin Fail to Lead This Cycle?

By David Feld, Bankless

Translated by Saoirse, Foresight News

The new cycle appears to have begun, but there are real-world concerns surrounding Bitcoin that warrant serious consideration. And the risks I'm referring to go beyond just quantum security vulnerabilities.

Like me, many of my online peers are considering one possibility: Bitcoin underperforming the broader market in this next cycle. Much like in the previous cycle, where the vast majority of altcoins failed to reach significant new all-time highs.

Bitcoin’s price has already surged significantly. You might find my take outrageous, but read on.

Bitcoin Has Gone Mainstream

The core narrative of the previous cycle was the mainstream adoption of Bitcoin.

The rally kicked off with the approval of spot ETFs, allowing institutional capital to enter with striking results: BlackRock's IBIT became the fastest ETF ever to surpass $10 billion in assets. Then came Trump's campaign and election victory, which included a platform for establishing a Bitcoin Strategic Reserve (BSR), serving as another major catalyst pushing Bitcoin past six figures. Meanwhile, Saylor continued his massive weekly Bitcoin purchases. This wave of buying incentivized other corporations to adopt digital assets into their corporate treasuries, following suit in accumulating coins.

A key takeaway from the previous cycle is that Bitcoin significantly expanded its base of retail and institutional holders. No other crypto asset has ever garnered such widespread support, both inside and outside the markets.

But now, I struggle to find new incremental buyers. The DAT trading narrative has largely faded; the Bitcoin strategic reserve rally has mostly priced in, with governments currently relying on seized Bitcoin rather than direct purchases. Anyone wanting to buy Bitcoin can do so through ETFs already. I'm not saying buy pressure will disappear, but opening these channels was itself a market catalyst. These bullish drivers cannot be easily repeated.

As Bitcoin kicks off this cycle, it lacks a massive pool of untapped new buyers and instead faces multiple headwinds. What worries me most is the unresolved quantum risk: a sufficiently powerful quantum computer could derive a private key from a public key, draining the Bitcoin held at that address. While Bitcoin developers have proposed safeguards like BIP-360, a full-network migration plan hasn't been implemented yet.

Then there's the potential sell pressure from Strategy. Saylor now runs the company as an actively managed fund, balancing Bitcoin holdings, shareholder demands, preferred dividend payouts, and debt repayment, no longer treating "Bitcoin hoarding" as the sole objective. Strategy has already sold Bitcoin for dividends, and management has stated the company is shifting from one-way accumulation to active capital management.

In a sense, Strategy's current state highlights a more thorny dilemma for Bitcoin: a cultural crisis.

Bitcoin's Cultural Dilemma

When Bitcoin was born, it was intended as a currency detached from the traditional financial system. Now, fund managers are making large purchases, packaging them into products, charging management fees, and selling investment exposure to retail investors.

This undoubtedly brings obvious benefits, such as being able to buy Bitcoin through an Individual Retirement Account (IRA). But the contradiction is also clear: Bitcoin was originally designed to bypass the traditional financial system, yet today that very system has become one of the primary channels for ordinary people to access Bitcoin and profit from it.

Recent writings by Ben Sixsmith, a veteran UK commentator, inspired this line of thought. His critique of this cultural contradiction is sharp: "Bitcoin believers are starting to feel their mission is complete, so they've chosen to compromise with reality."

I believe many more people hold this view than you'd expect, and the strength of Zcash is a signal. David Hoffman, co-founder of Bankless, has raised a similar point: as Bitcoin becomes institutionalized, its original cypherpunk character is fading. Zcash and Bitcoin share the same monetary baseline: a 21 million supply cap and proof-of-work consensus, plus built-in native privacy features—a characteristic Bitcoin has never truly achieved. This also makes Zcash harder to absorb and assimilate by the traditional financial system compared to Bitcoin.

Zcash is also proactively addressing quantum security risks. It is developing the next-generation shielded protocol Tachyon, aiming to build privacy solutions for the post-quantum era.

Against this backdrop, Zcash could trigger a positive feedback loop: ZEC rises → markets question Bitcoin more → more capital flows into ZEC, reinforcing the cycle. I think Zcash has the opportunity to capture a significant portion of Bitcoin's monetary premium. Hopefully, this competition will force the Bitcoin developer community to tackle quantum security risks with adequate urgency.

Altcoins Finally Have Fundamentals

However, I'm not simply bearish on Bitcoin. There's a strong thesis for altcoins as well, boiled down to one simple fact: altcoins are maturing.

Hyperliquid perfectly demonstrates how critical token fundamentals are to market performance. The crypto space has now birthed projects generating stable revenue, with many top-tier protocols prioritizing returning fee revenue back to their tokens. Hyperliquid is a prime example: roughly 97% of protocol fees are used for HYPE buybacks, with cumulative buybacks already far exceeding $1 billion. As Evanss6 noted in a recent piece, buybacks have become such a major trend that even the Financial Times has started tracking this data.

Beyond that, Uniswap utilizes protocol fees to buy back and burn UNI; Lighter dedicates all revenue to LIT buybacks; Aave launched automated buybacks last year; shturl.c continues buying back PUMP; and Ethena is rolling out its own buyback mechanism.

This introduces what the crypto market lacked before: tokens tied to real business activity. Increased product usage translates into demand for the token or reduced circulating supply. Moreover, these businesses still have immense growth potential. The U.S. Commodity Futures Trading Commission (CFTC) has paved the way, allowing compliant platforms to offer crypto perpetuals to U.S. users. The SEC's newly introduced innovation exemption allows permitted decentralized exchanges (AMMs) to trade tokenized U.S. equities with embedded rights on a limited basis.

Products that were inaccessible to U.S. users or carried unclear legal risks during the last cycle are now gradually opening up. Projects like Hyperliquid, Lighter, and Uniswap possess something Bitcoin increasingly lacks: entirely new markets waiting to be tapped.

Of course, not every altcoin has this opportunity. The chances are concentrated in high-quality targets: projects with real users, stable revenue generation, mechanisms that funnel business profits to the token, and vast untapped markets.

That is the core thesis of this article: Bitcoin doesn't necessarily have to crash. Even if Bitcoin continues to rise, it could still underperform the broader market. The previous cycle revolved entirely around Bitcoin; this rally's focus will likely shift toward a select few assets whose target markets are still expanding.