Bitcoin is facing its weakest sentiment cycle in history, according to Lyn Alden, a Bitcoin macroeconomist who said the asset is bound to sustain itself as Strategy revealed a $216 million Bitcoin sale earlier this week.

“I don’t think anything will save Bitcoin,” Alden he said In a Tuesday interview with journalist and Bitcoin educator Natalie Brunell, she said the asset’s long-term success must come from its own fundamentals, not external catalysts.

“The asset simply needs to survive on its own,” Alden said, pointing to Bitcoin’s fundamental properties as a liquid, permissionless way to store and send value, rather than relying on a modern source of demand.

Her comments come as institutional adoption and corporate treasury strategies have become features of Bitcoin’s latest market cycle. On Monday, Strategy’s weekly 8-K filing revealed that it had sold 3,588 BTC.

Bitcoin sentiment drops to lowest level in the cycle

Alden said the current downturn is different from the bear market of 2022, when Bitcoin fell to just $16,000, but enthusiasm among Bitcoin investors remained relatively high.

“This is the lowest sentiment I have personally seen for Bitcoin,” Alden said, pointing to a combination of fading narratives, a more corporate-driven market cycle and disillusionment among investors.

Alden said her bottom line is that Bitcoin won’t hit a modern record high this year, although she acknowledged the asset’s volatility leaves room for a keen move higher.

“The base case I would like to see is just no new bottoms” and a technical picture that shows “flat up, not flat down,” Alden said.

STRC has found demand, but leverage remains a risk

The strategy of Michael Saylor, the world’s largest corporate holder of Bitcoin, has come under increased scrutiny during the downturn as investors reassess the risks associated with his Bitcoin-backed capital structure and preferred equity products.

Alden said Strategy’s STRC preferred stock plays a role for investors who want access to the company’s Bitcoin strategy without directly owning the asset or taking on the full volatility of Bitcoin.

Source: Mateusz Sigel

She noted that STRC has become the most preferred security in the market, but warned that higher-yielding BTC-linked products could encourage investors to exploit additional leverage.

Related: Strategy’s Bitcoin sales could give BTC a “sustained bottom,” says Grayscale

She added that Strategy’s recent steps to rebuild reserve coverage and introduce additional safeguards were a reasonable response to market stress, although the product’s long-term performance still depends on Bitcoin’s price action.

Alden emphasizes the urgency of changes in Bitcoin

Alden also discussed the Bitcoin 110 Improvement Proposal (BIP-110), which aims to reduce web spam by limiting data-intensive transactions, including transactions used to store images.

Alden said she is generally cautious about efforts to quickly change Bitcoin’s rules, warning that some proposals could make the network more convoluted or impact its existing security features.

Source: Eric Balchunas

She said she would analyze technical arguments for and against changes to the protocol, but criticized the way some proposals were presented to the public. Alden argued that viewing the protocol change as an “existential issue” for Bitcoin overstates the stakes, calling such an approach “mismarketing.”

Warehouse: Has Bitcoin bottomed this cycle? Analysts say “not yet”