Bitcoin’s Next Rally Won’t Be Fed-Driven, Analyst Warns

In a recent interview with Coin Stories host Nathalie Brunell, macro analyst Lyn Alden delivered a sobering message for Bitcoin investors banking on a Federal Reserve rescue. She argued that the next policy shift is more likely to resemble a “slow balance-sheet creep” than the trillions in “nuclear print” quantitative easing that historically juiced risk assets like Bitcoin. Alden pushed back against the reflexive market call that every equity downturn forces the Fed’s hand, stating bluntly that “the Fed only cares mainly about the liquidity of the treasury market and the interbank lending market.” She emphasized that even a significant stock market decline of 10-30% would not, in itself, be a catalyst for massive stimulus.

Alden’s analysis hinges on the current financial plumbing. She noted that the conditions that demanded emergency-scale interventions—like an overlevered banking system with low cash ratios and acute private-sector stress—are not present today. Bank cash ratios remain “still pretty high.” Barring a COVID-scale disruption or a major escalation in geopolitical or financial conflict, Alden’s base case is for incrementalism. This view was underscored by Brunell’s reference to comments from Fed Chair Jerome Powell about “slowly” expanding the balance sheet with purchases starting around $40 billion in short-term Treasury bills, a far cry from the trillions some crypto bulls anticipate.

“Mainly because the conditions are not such that they would need a big print in the near future,” Alden explained. “There are scenarios that can absolutely result in a big print or a nuclear print […] but when you kind of run the numbers of how much debt is coming out, how levered or unlevered banks are, they just don’t really need a lot of printing. A little printing gets them a long way.” This framework suggests the era where “micro doesn’t matter at all” for Bitcoin—reserved for true emergency stimulus—is not the near-term setup.

Alden framed the current crypto cycle as unusually underwhelming, not just in price performance but in broader participation. She noted that market sentiment “is worse than 2022,” attributing the malaise to a missing retail bid, a lack of a classic “alt season,” and a market that has “kind of run out of narratives.” Bitcoin, she observed, topped out around $126,000, a level she considered below the bar for a satisfying cycle peak.

The analyst tied this muted performance to “mediocre” topline demand and a fiercely competitive capital-market landscape. AI-linked equities, epitomized by Nvidia (NVDA), and even traditional safe havens like precious metals have successfully competed for investor mindshare and capital. Sovereign buyers “didn’t really show up,” Alden said, and the retail cohort largely stayed sidelined. This has left “the corporate institutional side” and higher-net-worth brokerage buyers, facilitated by the spot Bitcoin ETFs, as the main marginal source of demand.

Alden also downplayed the notion that derivatives and ETFs are the primary culprits capping Bitcoin’s upside, even if they can temporarily “inflate” synthetic supply. The core issue, she argued, is simpler: the demand impulse has not been strong enough to overwhelm a now-larger, more liquid Bitcoin market. The asset must now win attention on its own merits. “It’s supportive […] but Bitcoin still has to compete on its own merits for investor attention,” Alden stated. “So, you know, basically it has to compete with Nvidia […] with everything out there that people can own.”

Looking ahead, Alden’s outlook suggests a transition from speculative frenzy to foundational strength. She expects market bottoms to form as “fast money gets out” and coins rotate into “strongly held hands.” Consequently, price recovery is more likely to be a gradual grind than a dramatic V-shaped rebound, a process that could see Bitcoin sit “cheap for a while” in the custody of committed holders.

On the upside, Alden pointed to a potential catalyst scenario where the current AI trade eventually peaks, freeing up capital and attention. At that point, with Bitcoin held in tight hands, only “a marginal amount of new demand” might be needed to restart a positive feedback loop, potentially aided by continued buying from corporate treasuries adding Bitcoin to their balance sheets. This sets up a different dynamic for the next leg higher, one less dependent on macroeconomic theatrics.

Alden’s core warning is clear: this cycle may not be saved by Fed policy. If Bitcoin is to reassert itself, it will be less about investors waiting for a macro bailout and more about whether a critical mass still values its fundamental proposition as “self-custodial […] undebasable savings” in a noisy financial market filled with shiny alternatives. The challenge, and the opportunity, is for Bitcoin to prove its worth when it’s not the only headline-grabbing asset in town.