During an appearance on the Coin Stories podcast hosted by Natalie Brunell, macro strategist Lyn Alden offered a detailed assessment of why Bitcoin’s current cycle has fallen short of expectations – and what might ultimately reignite momentum.
Key Takeaways
- Bitcoin is underperforming because capital is flowing into AI stocks instead.
- No fast rebound expected – more sideways or downside likely first.
- Retail investors are largely absent this cycle.
- AI could later trigger a rotation back into Bitcoin.
- Gradual money printing still supports Bitcoin long term.
With Bitcoin trading near $67,849 in February 2026 – well below its October 2025 high of $126,100 – Alden described the market as being stuck in a prolonged “grinding” phase rather than setting up for a rapid V-shaped recovery.
Competition For Capital Is Real
According to Alden, Bitcoin is not failing in isolation – it is competing. Capital that might historically rotate into crypto has instead been pulled toward high-performing AI equities and select hard assets. She specifically pointed to companies like Nvidia, whose explosive gains have captured both retail and institutional attention.
In her view, liquidity this cycle has been absorbed by AI infrastructure spending on a massive scale. Instead of flowing into Bitcoin or traditional hedges, money has been redirected toward data centers, chips, and large-scale technology buildouts that are currently supporting U.S. GDP growth.
The Missing Retail Wave
Unlike previous cycles, Alden emphasized the absence of a broad retail surge. Institutional players and corporate entities – primarily via ETFs – have driven much of the demand. What’s missing is grassroots self-custody adoption and the kind of retail enthusiasm that historically accelerates bull markets.
Without that “retail deluge,” Bitcoin lacks the reflexive upside dynamic seen in prior cycles.
The AI Pivot Could Be Bitcoin’s Catalyst
Paradoxically, Alden believes AI could ultimately become Bitcoin’s tailwind.
If AI stocks become excessively overvalued – what she described as “silly big” – and returns begin to compress, capital may rotate into assets perceived as having more asymmetric upside. Bitcoin could benefit from that shift, particularly if tech valuations struggle to justify continued capital expenditure growth in 2026.
She expects 2026 to be a weaker year for high-multiple tech as valuations normalize.
AI – Deflationary And Inflationary At The Same Time
Alden characterizes AI as a double-edged macro force.
On the digital side, AI is structurally deflationary. It lowers the cost of white-collar tasks such as software development, finance, and legal work, reducing service inflation and improving productivity.
But on the physical side, AI creates bottlenecks. The global data center buildout – projected to reach roughly $2.5 trillion in 2026 – is competing for energy, labor, copper, and industrial inputs. That dynamic could produce cost-push inflation, particularly if power supply expansion fails to keep pace.
Energy remains the critical variable. Without sufficient nuclear or natural gas expansion, AI-driven electricity demand could reintroduce inflationary pressure.
The Inflation Trap
Alden frames this decade within what she calls an “inflation trap.” High sovereign debt levels mean governments are likely to rely on gradual balance sheet expansion rather than the sudden stimulus seen in 2020.
She does not expect “nuclear” money printing. Instead, she anticipates steady liquidity expansion – supportive for hard assets, but not necessarily explosive in the short term.
In that environment, Bitcoin must stand on its own merits as a self-custodial hard money asset rather than relying purely on macro stimulus.
Sectors Positioned For A Two-Speed Economy
Alden sees 2026 as a transition year defined by a “two-speed economy”:
Energy infrastructure – particularly electrical equipment, nuclear power, and natural gas – acts as the chokepoint for AI growth.
Commodity producers such as copper miners benefit from the physical buildout of AI infrastructure.
Legacy businesses with pricing power in the real economy may outperform tech firms currently priced for perfection.
Bitcoin remains, in her view, the primary hedge against gradual monetary expansion.
She also expects a rotation from purely digital plays toward companies that combine AI optimization with real-world supply chains – blending digital intelligence with physical productivity.
No V-Shaped Recovery Expected
In the near term, Alden cautions that Bitcoin could still see another $10,000 to $20,000 downside before forming a durable bottom. She does not anticipate a rapid rebound.
Instead, the path forward may involve patience – and a shift in capital flows.
If AI enthusiasm cools, if liquidity expands gradually, and if retail engagement returns, Bitcoin’s next meaningful leg higher may begin. Until then, Alden suggests the market remains in consolidation rather than breakout mode.
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
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Source: https://coindoo.com/bitcoin-is-stuck-this-cycle-and-ai-is-the-culprit-heres-why/
