Bitcoin No Longer Dancing Alone? This Cycle May Belong to Altcoins with Fundamentals

Original author: David Feld, Bankless

Original compilation: Saoirse, Foresight News

A new cycle appears to have begun, and around Bitcoin, there are some real risks worth serious consideration—and the risks discussed here are not just quantum security vulnerabilities.

I, along with quite a few online peers, have been pondering a possibility: that Bitcoin underperforms the broader market in the coming cycle. Just as in the last cycle, the vast majority of altcoins failed to post any meaningful all-time highs.

Bitcoin's price has already surged substantially, and you may find my thinking absurd, but please read on.

Bitcoin Has Gone Mainstream

The core story of the last cycle was Bitcoin's mainstreaming.

The rally kicked off with the approval of spot ETFs, which opened the door for institutional capital, and the results were striking: BlackRock's IBIT became the fastest ETF in history to surpass $10 billion in assets. Then Trump ran for office and won, with a campaign platform that included establishing a Bitcoin Strategic Reserve (BSR), which became a major catalyst pushing Bitcoin's price past six figures. Meanwhile, Saylor kept making large Bitcoin purchases every week, and this buying frenzy led other companies to add digital assets to their corporate reserves and keep accumulating coins.

The key point: in the last cycle, Bitcoin greatly broadened its base of individual and institutional holders. No other crypto asset, inside or outside the market, has ever garnered such widespread support.

But now, I find it hard to identify new incremental buyers. The DAT trading narrative has largely collapsed; the Bitcoin strategic reserve story has largely played out, with governments currently relying mainly on Bitcoin seized from enforcement actions rather than direct purchases. Anyone who wants to buy Bitcoin can already do so through ETFs. I'm not saying buying will disappear, but opening these channels was itself a market catalyst, and such tailwinds cannot simply be repeated.

Bitcoin began this cycle not with a massive pool of new buyers waiting to be unlocked, but rather facing multiple headwinds. What worries me most is the unresolved quantum risk: a quantum computer with sufficient computing power could derive a private key from a public key and access the Bitcoin held at that address. To be sure, Bitcoin developers have proposed protective solutions such as BIP-360, but a network-wide migration plan has yet to be adopted.

Then there is the potential selling pressure from Strategy. Saylor now runs the company like an actively managed fund, weighing Bitcoin holdings, shareholder demands, preferred stock dividends, and debt repayment, rather than treating "stacking Bitcoin" as the sole objective. Strategy has already sold Bitcoin to fund dividends, and management has said the company is shifting from one-way accumulation to active capital management.

In a sense, Strategy's current situation leads directly to Bitcoin's more intractable problem: a cultural crisis.

Bitcoin's Cultural Dilemma

When Bitcoin was born, it was meant to be a currency outside the traditional financial system. Now fund managers buy it en masse, package it into products, charge management fees, and sell the investment exposure to ordinary investors.

There are of course obvious benefits, such as being able to buy Bitcoin through my individual retirement account (IRA). But the contradiction is equally clear: Bitcoin was originally designed to bypass the traditional financial system, yet that very financial system has become one of the main channels through which ordinary people access and profit from Bitcoin.

Sixsmith (Ben Sixsmith, a veteran British commentary writer) recently wrote an article that inspired this series of reflections of mine, and his assessment of this cultural contradiction is very sharp: "Bitcoin believers have begun to think Bitcoin has completed its mission, and so they choose to compromise with reality."

I think there are far more people who hold this view than many imagine, and Zcash's strength is one signal. David Hoffman (co-founder of Bankless) has made a similar point: after Bitcoin's institutionalization, its original cypherpunk character is fading. Zcash and Bitcoin share the same underlying monetary design: a 21 million supply cap and proof-of-work consensus, while additionally featuring native privacy—a feature Bitcoin has never truly achieved, which also makes Zcash harder to absorb and assimilate into the traditional financial system the way Bitcoin has been.

Zcash is also more proactive in confronting quantum security, developing its next-generation shielded protocol Tachyon, with the goal of building a post-quantum privacy solution.

Against this backdrop, Zcash could well form a positive feedback loop: ZEC rises → the market questions Bitcoin more → more capital flows into ZEC, reinforcing the loop. I think Zcash has a chance to capture a substantial portion of Bitcoin's monetary premium. Hopefully this competition can force the Bitcoin developer community to address quantum security with sufficient urgency.

Altcoins Finally Have Fundamentals

But I'm not simply bearish on Bitcoin. Altcoins also have a strong case, put simply: altcoins have matured.

Hyperliquid is a good demonstration of how crucial token fundamentals are to price action. The crypto space has now produced projects capable of generating steady revenue, and many leading projects prioritize channeling protocol revenue back to their tokens. Hyperliquid is a typical example: about 97% of protocol fees are used for HYPE buybacks, with cumulative buybacks already well over $1 billion. As Evanss6 noted in a recent article, buybacks have become a trend large enough that even the Financial Times has begun tracking such data.

Beyond that, Uniswap uses protocol fees to buy back and burn UNI; Lighter uses all revenue for LIT buybacks; Aave launched automated buybacks last year; shturl.c also continuously buys back PUMP; and Ethena is implementing its own buyback mechanism.

This brings something the crypto market has long lacked: tokens tied to real businesses, where increased product usage can translate into demand for the token or a reduction in circulating supply. And these businesses still have enormous room to grow. The U.S. Commodity Futures Trading Commission (CFTC) has already paved the way for 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. equities with attached rights on a limited basis.

Products that U.S. users could not access and whose legal risks were unclear in the last cycle are now gradually opening up. Projects like Hyperliquid, Lighter, and Uniswap possess what Bitcoin increasingly lacks: entirely new markets still to be tapped.

Of course, not all altcoins have a shot. The opportunity is concentrated in quality names: projects with real users for their products, steady revenue generation, mechanisms that pass business earnings through to the token, and broad markets yet to be penetrated.

This is the core argument of this article: Bitcoin won't necessarily crash. Even if Bitcoin keeps rising, it could still underperform the market. The last cycle revolved entirely around Bitcoin; the focus of this cycle will most likely shift to a handful of assets whose target markets are still expanding.