Lyn Alden: Bitcoin's Next Move, Strategy's STRC Volatility & the Protocol Debate

**Lyn Alden** (0:00)
I don't think there's anything coming to save Bitcoin. The kind of the bare move we've seen in Bitcoin aligned with that prior capital drain I mentioned for AI stocks. They became, at least temporarily, the fastest source in the race. Bitcoin's already kind of near the bottom of its historical valuation range. The asset just has to survive on its own merits.

**Natalie Brunell** (0:16)
Let's talk a little bit about strategy.

**Lyn Alden** (0:17)
Stretch was doing very well. It did become the biggest preferred ever done. People did apparently build a lot of leverage on top of STRC. So they ran into a pretty big volatility event. There is tail risk. It's got a big reserve backing it, but it's not inherently guaranteed if Bitcoin has crazy price action. In addition, it can de-peg.

**Natalie Brunell** (0:41)
Lyn, it's so great to see you. Thanks so much for joining me on the show again.

**Lyn Alden** (0:45)
Always happy to hop on.

**Natalie Brunell** (0:46)
I feel like there's so much to talk about.
I'm not sure where to start, so why don't we maybe go with the bigger picture first? You've had some great analysis in your recent reports. So why don't you summarize what you feel is happening with the market right now, certain areas outperforming like hyperscalers, AI, gold and Bitcoin underperforming, but how do you see it all?

**Lyn Alden** (1:09)
Yeah, right. I think it surprises nobody listening to this. Of course, AI is the biggest trade on the market, names associated with AI. Of course, there's winners and losers from that dynamic. These have come in phases. Obviously, one of the early winners was NVIDIA, selling the GPUs that powers a lot of this. Once they already ran a lot, and especially once we shifted from chat bot style AI more towards agentic AI, memory became very much the bottleneck. We've seen a huge surge in the memory stocks. Really, since autumn of last year, so autumn of 2025, that's when the hyperscalers, so we used to refer to them, some of them as the Mag-7, the big Internet companies we all know, the Microsofts, the Metas, the Alphabets, Amazon, these really big companies. They used to be extremely free cashflow positive. They would operate things like Google search, or network effects, social media, really sticky operating system software that they're very high ROI.
They spend a lot in absolute terms, but they only had to spend a small percentage of their profit, so they could channel all those extra free cashflows into buybacks or dividends and things like that. But ever since autumn or the second half of last year, they've made very aggressive catbacks to build out data centers, buy these chips that are increasingly expensive because there's supply-demand mismatches.
We've seen a virtually unprecedented falloff in their free cashflows. Some of them have gone free cashflow negative, some of them have gone out to debt markets, trying to raise as much capital as possible rather than just purely funding it from cash. They've generally reduced or halted their buybacks, some of them have increased their share counts.
They've been a little bit concerned around that because the free cashflow has dried up, they have to hope that years from now that these investments pay off with the returns that those hyperscalers hope they will. The other side of that, of course, the chip stocks, especially the later round of ramp stocks and then companies that make the machines that let the ramp stocks make the chips, there's a whole cascade of dominoes. Those have done amazing in recent months.
Other losers in this market dynamic are, of course, the variety of software companies that are perceived. It's not clear if it's right or wrong yet, but they're perceived to be likely going to be very disrupted by AI. So far, it's not really shown up in their fundamentals too much, but it's shown up in their share price, discounting the future. Then we've also seen pretty poor performance from both gold and Bitcoin. Bitcoin peaked roughly when the free cash flow is just drained and everything fled into these high-performing memory stocks.
Some of them, there's obviously capital rotating out for cause and effect, and there's other ones where the marginal source of capital that might have been chasing that really big gold rally that there was, or might have considered Bitcoin the fastest horse in the race, as Paul Tudor Jones once said. They see memory stocks going up, like doubling in months and then going up, in some cases, 10X in a pretty short period of time. So a lot of capital has gone into those markets. I think a lot of that move is rational. I think the rise of course of chip stocks is rational to a point. Like many big moves, I mean, these things tend to get ahead of themselves to some extent. So you can always overshoot and you almost certainly will. You almost never invest exactly the amount and value a new thing perfectly. Usually, you overshoot and then undershoot the other direction. So yeah, there has been a big capital drain and a rotation toward, especially the second wave of semiconductor rallies.