The hard truth Bitcoiners must swallow: It doesn't pay to HODL, at least not as much as T-bills nowadays — one of many things that may blunt the next bull run, Crystal writes.

Catch up quick: The price of the world's largest digital asset fell sharply last week in a selloff unmatched since late 2022, leaving investors wondering if now is the time to buy or sit out the bleed.

By the numbers: BTC is trading around $26,000 as of this afternoon.

The big picture: If Bitcoin's history is any indication of how it may behave in the future, the crypto world should see another big BTC rally come summer 2024 — but don't hold your breath, experts tell Axios.

• This particular cycle also has to fight through a bevy of macroeconomic and industry-specific headwinds.

What they're saying: Sam Lee, who runs investment advisory firm SVRN Asset Management, draws a line from the broader stock and bond markets to crypto and why that does not bode well for coin prices — BTC or otherwise.

• "People are trying to squeeze more and more money out of a pool that is drying up and smaller than what it was a year ago," Lee tells Axios.
• "You can own T-bills or just own cash and get a 5% yield," Lee said, comparing it to the 0% yield folks holding dollar-pegged stablecoin might get. "That's why you see stablecoins' market cap bleeding out — a lot of money is draining out of the ecosystem."
• "The opportunity cost of owning pet rocks or things that don't yield cash flow has gone way up." (Read more about that below)

What others are saying: "People get caught up in the rapid rises up and crashes down," according to Sam Callahan, a lead analyst at bitcoin financial services firm Swan.

• "BTC dropped below its 200-day moving average in the recent crash — long term that's usually been a good time to buy."

Meanwhile, there's upside if spot-bitcoin ETFs get the nod and if crypto legislation clears the regulatory uncertainty.

Be smart: When folks give investing advice, they hardly ever disclose their time horizon. Is now a good time to buy? Well, that depends on whether or not you want to make your money in December or in 2030.

• Lee would also point to late-great investing analyst Benjamin Graham's advice about "speculating when you think you are investing."

What we're watching: BTC highs, lows and psychological levels:

• $69,000: The all-time high of the previous cycle is the "beacon," per Callahan. "As it approaches and eventually breaks through that, we're in a new cycle here, we're in a new bull market."
• $30,000: This is the level where BTC hits "takeoff," per Kenny Estes, CEO at Chicago-based fund manager Diffuse Digital. "A rally will come when spot bitcoin ETFs get approved," he said.
• $25,000: That is "a psychological" low that would scare folks, Estes added.

"The problem that BTC has is that it has become so heavily correlated to risk assets," Kurt Wuckert Jr., chief bitcoin historian at CoinGeek, tells Axios. "If the tech sector is going to get hit, bitcoin is going to take a hit."

The intrigue: The $15,000 level was a low BTC was never supposed to touch in 2022, Wuckert said. (In the 2017 cycle, the high was just below $20,000)

• There's this idea that with every new cycle, BTC prices hit higher highs and higher lows, never falling below the prior cycle's highs.
• Only it did, in November 2022, after FTX collapsed. (BTC went just below $16,000 at one point)

"That really spooked Big Money, or institutional investors," folks who were supposedly coming in to save the day didn't, Wuckert added. "Because the thing that the bitcoin geniuses said wouldn't happen, did happen."

Between the lines: That puts BTC in a corner labeled risk asset.

Greed would have bitcoin sit there and do nothing forever, Crystal writes.

What they're saying: "Bitcoin is the most disruptive technology in a generation. It's tech that is as disruptive as the internet," Wuckert tells Axios.

• "But people can't get over this presumption that there is an opportunity cost to building on bitcoin. They fall back to — I'm going to hold bitcoin and hope someone else makes it valuable."

The intrigue: The advent of Ordinals, NFTs inscribed on satoshis — the smallest unit of bitcoin — changed all that, or "the most exciting thing to happen" to BTC in its over decade history, per the Bitcoin historian.

• Only the most vocal Bitcoin developers are calling Ordinals a "malicious attack" on the network that needs to be snuffed out, Wuckert said.

Zoom in: Imagine how unproductive an investment in oil would've been had it not been injected into every aspect of the economy, Wuckert says. If it was merely a thing that sat there, and people traded it, oil would've made terrible returns.

• Same thing with bitcoin — it needs to do more than just be a store of value, a thing to trade or just HODL.

"There's something goofy about everyone's mindset — we can all be rich and not work that hard — cute, but I don't think that's going to work very well," Wuckert said.

Counterpoint: A pair of venture capitalists at Ten31, told us they're really excited about what Bitcoin is doing to enable load balancing with the TVA and open liquidity for the crypto-rich with Unchained.

In the weeds: "Bitcoin and Ethereum are digital pet rocks," SVRN's Lee says. "They don't generate their own cash flow. ETH does a little bit, but BTC, the big one, does not."

• "It's kind of like gold. You hold it and it doesn't produce any yield."

The noise: "It's also a giant speculative meta-game, and you see the cynicism of Crypto Twitter. They're not talking about people using things or having functionality. It's, 'What's the next narrative.'"

• 💡 Anyone who wants to go deeper into trading the narrative should check out this essay from an influential trader.

The intrigue: One thing that can be used to divine where gold and, perhaps digital gold, prices go, are Treasury Inflation-Protected Securities or TIPs.

The signal: When the yield on TIPs is low or negative, gold and BTC do well, Lee explains. "Peak crypto coincided with the bottom in real rates."

• The yield on 30-year TIPs was under -0.6% in December 2021.
• State of play: The yield is now at 12-year highs at a little over 2%, Lee says.

The bottom line: "Crypto is not completely useless and irredeemable. There is a path for companies and people to use [blockchain] by default to serve as the rails of financial activity," Lee said, but it'll take time.

• For now, the allure of crypto remains gold-like: "cult money."

Bitcoin has died 474 times, Crystal writes.

• This year, only seven times, according to 99bitcoins.com.
• That's way below its peak (ICO fever) of 124 deaths in 2017.

The bottom line: Long live bitcoin.

There is a catalyst that stands to help BTC prices up, Crystal writes.

What's happening: The halvening, estimated to land in April 2024, when block rewards are cut in half.

In the weeds: It's BTC's automatic inflation cap that keeps supply in check — the more blocks get mined, the smaller the reward over many, many years.

What's next: Bitcoin's patterns over its 14-year lifespan promise another rally after the halvening, per bitcoin historian Wuckert, but there's significantly less money chasing crypto now than there was before.

• Of note: Its prior halvenings — 2012, 2016, and 2020 — struck during an era of loose monetary policy that has since come to an end.
• "Even if the cycle repeats, it's going to be less exciting. There are not a lot of new people who haven't heard of bitcoin. If BlackRock is in — who else is there."

Maybe the U.S. central bank cuts rates, after raising them to 22-year highs.

Yes, but: "Central bankers aren't going to be eager to drop rates to zero, because a lot of how their policy responses are formed are based on experiences with the previous crisis," SVRN's Lee says.

• Catch up quick: Easy monetary policy didn't turn out the way it was supposed to; stimmy money went to trading.
• "So when the economy is softening, they're not going to be as quick to release liquidity. They'll be more measured," he said.

"Crypto has been wildly successful but got way overdone over COVID with liquidity sloshing around, and it's not reasonable to expect that kind of run again unless you see similar amounts of liquidity," Lee said.

Between the lines: Bitcoiners might get excited again around the halvening, and that could drive another upturn — maybe. Even still, there are headwinds facing Bitcoin now that it has never faced.

• Safe bet, a weaker bull. Not a ride like yesteryear's zoom-y rides, that is not unless Bitcoiners get creative.

This is a savage meme, Crystal writes.

Our thought bubble: It is weird how BTC swoons at exactly the wrong time for some.

• To be clear this is not our joke, nor our prediction.

Flashback: In January 2022, BTC slid and in the months after — down came Terraform, Celsius and FTX, and their leaders, Do Kwon, Alex Mashinsky and Samuel Bankman-Fried with them.

• State of play: BNB has also been on a downward trend since the SEC sued Binance in June and the exchange closed shop in other places.

Zoom out: The main character is BTC.