Alex Thorn: The four-year Bitcoin cycle is broken, macroeconomic trends favor higher prices, and Ethereum faces competition from Solana | Unchained

Key takeaways

• The traditional four-year Bitcoin cycle is considered broken, reflecting changes in market dynamics.
• Bitcoin’s market conditions are too chaotic to predict accurately for 2026.
• Bitcoin could experience both new cycle lows and all-time highs within 2026.
• Bitcoin is now viewed as a macro asset, influenced by broader economic conditions.
• The current macroeconomic environment may support higher Bitcoin prices due to lower interest rates and fiscal spending.
• Quantitative easing by the Fed is linked to potential bull markets in crypto.
• Institutional adoption and regulatory easing are expected to positively impact Bitcoin and crypto.
• Gold and Bitcoin are being sought as non-dollar hedges amid geopolitical instability.
• Ethereum’s asset value faces uncertainties, with declining network fees impacting its future.
• Ethereum’s value is closely tied to Bitcoin’s performance, affecting its market dynamics.
• Solana is emerging as a significant competitor to Ethereum, especially in institutional adoption.
• Privacy in crypto is becoming increasingly important for business operations and user security.

Guest intro

Alex Thorn is Managing Director and Head of Firmwide Research at Galaxy Digital, where he leads a team analyzing Bitcoin and the broader digital assets market. Previously, he spent more than a decade at Fidelity Investments, including co-managing Avon Ventures, an early-stage crypto venture fund, and serving as Director of Blockchain Research at the Fidelity Center for Applied Technology.

The end of Bitcoin’s four-year cycle

• “The four-year cycle for Bitcoin is empirically broken.” – Alex Thorn
• Market conditions are too chaotic to make reliable predictions for Bitcoin in 2026.
• Bitcoin could see both new cycle lows and new all-time highs in 2026.
• “I think we can definitively say the four-year cycle’s dead.” – Alex Thorn
• Bitcoin is considered a macro asset, with performance linked to macroeconomic conditions.
• “Bitcoin at this point is very much a macro asset.” – Alex Thorn
• The unpredictability of Bitcoin’s market behavior challenges established theories.
• Understanding Bitcoin’s historical price cycles is crucial for market analysis.

Macroeconomic influences on Bitcoin and crypto

• The macroeconomic environment, including lower interest rates, is likely to support higher Bitcoin prices.
• “Fiscal spending and risk asset prices go higher, benefiting Bitcoin.” – Alex Thorn
• Quantitative easing by the Fed is correlated with potential bull markets in crypto.
• “The Fed is back to quantitative easing, correlated with bull markets.” – Alex Thorn
• Long-term trends driving Bitcoin’s value are unlikely to change and may accelerate.
• “Trends driving the bull market for Bitcoin over the past three years are getting better.” – Alex Thorn
• Positive and negative forces create a chaotic market environment for investors.
• Awareness of economic conditions and market sentiment is essential for investment strategies.

Institutional adoption and regulatory changes

• Institutional adoption and regulatory easing are expected to positively impact Bitcoin and crypto.
• “Regulatory easing for crypto is very bullish for Bitcoin in the medium term.” – Alex Thorn
• The rise of gold and Bitcoin is driven by a search for non-dollar hedging instruments.
• “The world is looking for non-dollar hedges, and Bitcoin looks good in a chaotic world.” – Alex Thorn
• The maturation of institutional adoption will influence Bitcoin’s market dynamics.
• Understanding the current state of institutional adoption is crucial for market predictions.
• Regulatory changes could reshape the crypto market, impacting investment strategies.
• Knowledge of geopolitical trends is important for understanding crypto’s role as a hedge.

Ethereum’s challenges and competition

• Ethereum’s asset value faces uncertainties due to declining network fees.
• “Revenue has been declining by 60% every year for the past couple of years.” – Alex Thorn
• Ethereum’s value is closely tied to Bitcoin’s performance.
• “ETH is connected at the hip to Bitcoin.” – Alex Thorn
• Ethereum’s reliance on optimistic rollups and competition from Solana poses risks.
• “Building for a high throughput low fee future that may never come.” – Alex Thorn
• Solana is a significant competitor to Ethereum, especially in institutional adoption.
• “Solana has gained ground against Ethereum in terms of user adoption.” – Alex Thorn

The rise of Solana and its implications

• Solana is emerging as a better platform for stablecoin transactions due to its speed and decentralization.
• “Solana’s more decentralized than any other single sequence or optimistic rollup.” – Alex Thorn
• Solana’s growth prospects in onboarding new stablecoin supply are promising.
• “Solana’s growth prospects in stablecoin supply and tokenization efforts are promising.” – Alex Thorn
• Solana needs to focus on the perpetual decentralized exchange space to remain competitive.
• “Solana needs to level up in the perp dex space.” – Alex Thorn
• Running a successful perp dex is a lucrative business model in crypto.
• Understanding Solana’s competitive landscape is crucial for market positioning.

Privacy and its growing importance in crypto

• Privacy in crypto is becoming increasingly important for practical business reasons.
• “Traditional businesses operating on chain will want privacy.” – Alex Thorn
• Obfuscating the origin of funds is not inherently a crime.
• “Obfuscating the origin of funds is not a crime.” – Alex Thorn
• The trend towards privacy in crypto will continue to grow gradually.
• “Privacy is normal, and this is going to be a gradual trend.” – Alex Thorn
• Bitcoin’s UTXO model allows for greater privacy compared to account-based models.
• Understanding privacy features in blockchain technology is crucial for user security.

The future of stablecoins and regulatory impact

• The growth of stablecoins will be influenced by the implementation of the Genius Act.
• “The Genius Act is a catalyst for the growth of stablecoins.” – Alex Thorn
• Stablecoins represent a significant improvement over traditional payment systems.
• “Stablecoins are a shocking improvement over ACH or Fedwire.” – Alex Thorn
• Stablecoin issuers are exploring their own blockchains to capture transaction volume.
• “Stablecoin issuers are launching their own blockchains due to declining interest income.” – Alex Thorn
• Stricter regulations on stablecoins may lead to increased growth in DeFi.
• Understanding the regulatory landscape is crucial for stablecoin market predictions.

Prediction markets and their societal role

• Prediction markets have found product market fit, particularly with platforms like Polymarket and Kalshi.
• “Polymarket and Kalshi have different strengths in prediction markets.” – Alex Thorn
• The spike in trading volume for prediction markets is tied to significant events like elections.
• “Elections cause huge spikes in volume on prediction markets.” – Alex Thorn
• Prediction markets provide valuable odds on events for individuals and businesses.
• “Information markets have a valuable place in society for getting odds on events.” – Alex Thorn
• The Supreme Court may decide the legal status of sports prediction markets.
• Understanding the legal landscape is crucial for prediction market strategies.

The evolving landscape of decentralized finance

• The future of DeFi as a major investment theme is uncertain due to political hurdles.
• “Political hurdles impact the growth of DeFi as an investment theme.” – Alex Thorn
• Zcash could serve as a hedge against a dystopian future where Bitcoin’s privacy is insufficient.
• “Zcash could be a hedge if pure on-chain privacy is a huge need.” – Alex Thorn
• Bitcoin’s model allows for more privacy compared to Ethereum and Solana.
• “Bitcoin’s model is inherently more private than Ethereum and Solana.” – Alex Thorn
• Understanding privacy mechanisms in blockchain technology is crucial for DeFi users.
• Awareness of regulatory and political debates is essential for DeFi investment strategies.

The competitive dynamics of stablecoins

• Tether is a significant player not just in crypto but across various sectors of the economy.
• “Tether is one of the most important companies in the world.” – Alex Thorn
• Tether has a stronger market positioning compared to Circle and USDC, especially in non-Western countries.
• “Tether owns the user in non-Western countries.” – Alex Thorn
• Payments using the x402 standard will reach 30% of Base’s daily transactions.
• Understanding the competitive landscape of stablecoins is crucial for market predictions.
• The growth of Solana non-volatile transactions is expected to increase significantly by 2027.
• Awareness of market trends and standards is essential for stablecoin adoption strategies.