Bitcoin is struggling to hold above the $80,000 level. Macro investor Lyn Alden believes that the worst of the situation may have passed. In her podcast Milk Road, she stated that her basic judgment is that the bottom of this cycle for Bitcoin "has already appeared." However, she also added that this is just a matter of probability, not a definite conclusion. Alden is the founder of Lyn Alden Investment Strategy.

Why the bottom of Bitcoin may have already appeared

Her argument is based on how a bear market typically ends: when everyone who wants to sell has already sold, prices tend to hit rock bottom. Alden indicates:

• Most short-term traders have already left the market.
• Leveraged positions have been cleaned multiple times.
• The investors who remain are mainly committed long-term holders.

In her view, the structural risks that most people are familiar with have already been reflected in prices. The funds that are willing to sell for almost any reason may have already left the market.

But this does not mean that we have already entered a bull market.

Just reaching a bottom does not mean that Bitcoin will immediately rebound. Alden believes that the current selling pressure may have weakened, but the market still needs new catalysts to attract buyers back, and prices may continue to fluctuate for some time.

“I’m not necessarily saying that we are already in a bull market,” Alden stated. Nevertheless, she still believes that for those who invest on a multi-year cycle, the risk-return ratio of Bitcoin at current levels is “very attractive.”

AI Hackers: New Tail Risks in the Crypto Market

Alden believes that the risks that have not yet been factored into prices are of a technical nature. About a year ago, the main concern of the market was that quantum computing could crack Bitcoin's cryptography; now, however, the concern has shifted to the use of AI to crack the mathematical systems that protect digital assets, and this can potentially be achieved without the need for quantum computers.

If a single attack severely damages the Bitcoin network, even staunch holders may be forced to sell. Alden states that this represents a catastrophic tail risk, and it is very difficult to assign a probability to it, as the cryptography involved is extremely complex.

Why Complex Cryptocurrency Projects Face Greater Risks

Alden believes that attacks driven by AI pose the greatest threat to the most complex projects, for three reasons:

• Blockchain is an open system, and anyone can detect its weaknesses.
• The more complex the system, the more potential weak points there may be.
• Most encrypted transactions cannot be reversed once they are completed.

This is particularly important for DeFi users who are in pursuit of returns. Any potential reward must be weighed against the annual probability of hacker attacks that could result in the loss of some or even all of their deposits. In the view of Alden, many such returns are not worth taking such risks.

Alden remains cautious about most crypto markets outside of Bitcoin, with exceptions for stablecoins and certain tokenized assets. She believes that Bitcoin's relatively simple design makes it less exposed to risks, but no system is completely risk-free.

What does this mean for Bitcoin investors?

There are two aspects to this outlook. The selling pressure seems to be nearly exhausted, so the bottom may have already been reached; however, the next round of gains still requires a triggering factor, and a new technical risk has emerged that the market may not have fully understood yet.