Written by: David Feld, Bankless
Compiled by: Saoirse, Foresight News
A new cycle seems to have already begun. Around Bitcoin, there are some real-world risks worth taking seriously—and the risks being referred to here are not just quantum-security vulnerabilities.
Myself and many other online peers are also considering a possibility: that in the coming cycle, Bitcoin may underperform the broader market. Just like in the last cycle, most altcoins failed to set new all-time highs with any truly meaningful substance.
Bitcoin’s price has surged significantly. You might think my idea is far-fetched, but please keep reading.
Bitcoin has become mainstream
The most core story of the last cycle was Bitcoin’s mainstreaming.
The market got underway after spot ETF approvals, which brought institutional capital in—its results have been impressive. BlackRock’s IBIT became the fastest ETF in history to break $10 billion in asset size. Then Trump ran for election and won. His campaign platform included establishing a Bitcoin Strategic Reserve (BSR), which became another major catalyst pushing Bitcoin’s price to surpass six figures. Meanwhile, Saylor continues to buy Bitcoin in large quantities every week. This buying frenzy has encouraged other companies to incorporate digital assets into their corporate reserves, leading them to keep hoarding as well.
The key point is this: in the previous cycle, Bitcoin greatly expanded the population of individual and institutional holders. No other crypto asset has received such broad support—both inside and outside the market.
But now, it’s hard for me to find any new incremental buyers. The DAT trading narrative has basically collapsed. The Bitcoin strategic reserve trade is largely already in place. The government currently relies mainly on confiscated Bitcoins rather than directly purchasing them. People who want to buy Bitcoin can already do so through ETFs. I’m not saying buy-side demand will disappear, but simply opening up these channels is itself a catalyst for the market—these good news catalysts can’t be repeated so easily.
When Bitcoin kicked off this round of the market, it didn’t wait for a massive influx of brand-new buyers to be released. Instead, it faced multiple unfavorable factors. What worries me most is the unresolved quantum risk: a quantum computer powerful enough could derive a private key from a public key, and then use the Bitcoins in that address. Admittedly, Bitcoin developers have proposed protection measures such as BIP-360, but a network-wide migration plan hasn’t been implemented or adopted at scale.
Next is the potential sell pressure brought by Strategy. Saylor now runs the company as an actively managed fund, weighing trade-offs among Bitcoin holdings, shareholder demands, preferred stock dividends, and debt repayment. It’s no longer solely focused on “hoarding Bitcoin” as the only goal. Strategy has already sold Bitcoin to fund dividends, and management has said the company is shifting from one-way hoarding to active capital management.
In a sense, Strategy’s current situation also points directly to the more troublesome problem for Bitcoin: a cultural-level crisis.
Bitcoin’s cultural dilemma
At the beginning, Bitcoin was meant to be a currency separate from the traditional financial system. Now, fund managers buy massive amounts, package them into products, charge management fees, and then sell the investment exposure to ordinary investors.
Of course, there are obvious benefits—for example, I can buy Bitcoin through a personal retirement account (IRA). But the contradiction is also very clear: Bitcoin was originally designed to bypass the traditional financial system. Now, that very financial system has become one of the main channels through which ordinary people access Bitcoin and profit from it.
Sixsmith (Ben Sixsmith, a veteran British columnist) recently inspired my thinking in this series. His assessment of this cultural contradiction is extremely sharp: “Bitcoin believers start thinking Bitcoin has already fulfilled its mission, so they choose to compromise with reality.”
I think people who hold this kind of view are far more numerous than many imagine, and Zcash’s strength is a signal. David Hoffman (co-founder of Bankless) also proposed a similar point: after Bitcoin becomes institutionalized, its original cypherpunk quality is fading. Zcash and Bitcoin share the same foundational monetary design: a total supply cap of 21 million, and a proof-of-work consensus mechanism. They also add native privacy functionality—which Bitcoin has never truly managed to realize. That makes it harder for Zcash to be absorbed and assimilated by the traditional financial system in the same way as Bitcoin.
Zcash is also taking a more proactive approach to quantum security, developing its next-generation shielded protocol, Tachyon, with the goal of building privacy solutions for the post-quantum era.
Against this backdrop, Zcash is likely to form a positive feedback loop: ZEC goes up → the market questions Bitcoin more → more capital flows into ZEC, strengthening the loop. I believe Zcash has the opportunity to capture a substantial portion of Bitcoin’s monetary premium. I hope this competition will force the Bitcoin developer community to address quantum security problems with sufficient urgency.
Altcoins finally have fundamentals
But I’m not simply talking down Bitcoin. Altcoins also have strong logic. In simple terms: altcoins have matured.
Hyperliquid proves well just how crucial token fundamentals are to market performance. Now, in the crypto space, there are already projects that can generate stable income. Many top-tier projects prioritize routing protocol revenue back to tokens. Hyperliquid is a typical example: about 97% of protocol transaction fees go to HYPE buybacks, and the cumulative buyback total has already far exceeded $1 billion. As Evanss6 mentioned in a recent article, buybacks have become a trend large enough that even (The Financial Times) has started tracking this kind of data.
In addition, Uniswap uses protocol fees to buy back and burn UNI; Lighter uses all its income for LIT buybacks; Aave launched automated buybacks last year; shturl.c also keeps buying back PUMP; and Ethena is rolling out its own buyback mechanism.
This brings something that the crypto market has lacked in the past: tokens tied to real business, increased product usage, which can translate into demand for tokens or reduce circulating token supply. And these businesses still have enormous room to grow. The U.S. Commodity Futures Trading Commission (CFTC) has already opened a path, allowing compliant platforms to offer crypto perpetual contracts to U.S. users. The SEC’s newly introduced innovation exemption allows licensed automated market makers (AMMs) to trade tokenized U.S. stocks with limited accompanying rights.
In the last cycle, American users couldn’t participate, and there was uncertainty about the legal risks of certain products—now things are gradually opening up. Projects like Hyperliquid, Lighter, and Uniswap have something Bitcoin is increasingly lacking: entirely new markets that are still to be tapped.
Of course, not all altcoins have opportunities. The opportunities are concentrated in high-quality projects: those with real users and stable revenue, mechanisms that pass business earnings through to tokens, and a broad market that hasn’t been penetrated yet.
This is the core argument of this article: Bitcoin doesn’t necessarily crash. Even if Bitcoin continues to rise, it still might underperform the overall market. In the last cycle, everything revolved around Bitcoin. But in this round, the focus is likely to shift to a small number of target markets where certain assets are still expanding.