Eric Yakes, founder of Epoch Ventures, said in a recent appearance on the What Bitcoin Did podcast that Bitcoin may be moving out of the market structure that once produced 70% to 80% bear-market drawdowns, with the latest pullback of roughly 50% potentially signaling the end of the familiar four-year cycle.
The episode aired on Aug. 28 and was later summarized by PANews. Across the discussion, Yakes argued that Bitcoin is being revalued by the market as volatility declines, institutions keep entering through existing financial rails, and investors increasingly treat the asset as a hedge against fiat currency debasement rather than only as a high-risk trade.
What Yakes sees as the recent turning point
Asked what marked the key inflection point in the latest market move, Yakes said several major events came together to create what he called a historic turning point.
The first was Tether’s audit announcement. While he acknowledged that the move has been debated inside the industry, he called it a milestone because, in his words, a Big Four accounting firm verified Tether’s reserves. He said that was a key step in showing legitimacy to the mainstream financial world.
Yakes added that Tether is now among the top 20 holders of U.S. Treasuries globally and operates internationally on an independent basis. He also said the company has been buying large amounts of gold and Bitcoin and holds sizable reserves in both assets.
The second development, which he described as the more important one, was an announcement from the U.S. Treasury. Whether that is labeled yield curve control, or YCC, or a Treasury version of quantitative easing, or QE, he said the substance is the same: the Treasury is allocating funds in an attempt to directly influence long-term U.S. Treasury yields.
According to Yakes, the market quickly recognized what that implied and read it as a signal of more fiat debasement ahead. Bitcoin and gold, he said, moved higher almost immediately.
Why he thinks the four-year cycle may be breaking
When asked whether that means Bitcoin’s traditional four-year bull-and-bear cycle is changing, Yakes said yes, adding that this was one of the core predictions in Epoch Ventures’ annual report. He framed it bluntly: the cycle is breaking, or perhaps it never truly existed in the rigid form many investors assumed.
Historically, the market had come to expect Bitcoin bear markets to end with drawdowns of 70% to 80%. If this cycle’s floor turns out to be around a 50% decline, he said, that would suggest the market’s underlying structure has changed and that investors now see the asset differently.
He pointed to Michael Saylor as one example, saying Saylor was selling rather than buying during this phase. For Yakes, that showed that even one of Bitcoin’s biggest bulls was actively rebalancing capital. At the same time, ETF inflows continued against the broader market move. He said that combination reflected both institutional and retail demand, reinforcing the idea that Bitcoin is increasingly being treated as a hedge against fiat debasement.
Yakes said Epoch’s annual report had originally projected this shift would take shape by 2027, but he now thinks 2026 could become the year when Bitcoin decouples from equities and other broad risk assets. In that setting, he said, the asset would be seen more as a monetary debasement hedge and a countercyclical hedge.
Lower volatility changes portfolio construction
For asset managers, Yakes said, the decline in volatility is highly significant.
If Bitcoin’s downside in a worst-case scenario is only 50%, and may eventually compress toward 30%, he argued, portfolio managers can recommend it to clients with much more confidence. In the past, repeated drawdowns near 80% meant allocation sizes usually stayed in the 0% to 2% range.
If volatility keeps falling, he said, a 10% to 20% portfolio allocation can become reasonable from both a logic and risk-management standpoint.
He rejected the idea that smaller drawdowns necessarily mean smaller upside. In his view, Bitcoin demand is not ultimately driven by old price charts or by investors anchoring to historical cycle patterns. The deeper driver is the adoption of Bitcoin’s monetary function.
Yakes framed that around the three traditional functions of money: store of value, medium of exchange, and unit of account.
Bitcoin’s three S-curve phases
At Epoch Ventures, Yakes said, Bitcoin adoption is understood as a process that unfolds across three main S-curves, each tied to one of those monetary functions.
The first phase is store of value, and he said that is where Bitcoin sits today. He described it as the scarcest commodity in the world and the only truly permissionless payment network at global scale.
The second phase is the transition from store of value to medium of exchange. Once Bitcoin becomes an extremely solid savings vehicle, with most people holding at least some of it, Yakes said users will begin transacting directly in Bitcoin because of the superiority of its digital signatures and protocol design.
The third phase is becoming a unit of account.
Why gold’s monetary premium has not fully rotated into Bitcoin
Asked why the trillions of dollars in gold’s monetary premium have not yet shifted fully into Bitcoin, Yakes said the answer is simple: Bitcoin is still too young and still too small.
Gold is stable because the market is enormous and deeply liquid, he said. Countries such as China or Russia can buy or sell hundreds of billions of dollars’ worth of gold for international trade settlement without moving the price too sharply. Bitcoin, in his view, cannot yet absorb that kind of instantaneous liquidity at the same scale.
He compared the current stage of Bitcoin to watching LeBron James in high school. People may already know the player is headed for greatness, but he is still competing before reaching the top professional league.
Once Bitcoin’s market capitalization enters the $5 trillion to $10 trillion range, Yakes said, it could become one of the deepest, most active, and most standardized assets in the world. When that depth is in place, he expects a much larger rotation from gold into Bitcoin. At that point, he said, people may come to see Bitcoin as gold with higher returns and greater portability.
What could trigger a gold-to-Bitcoin rotation
Yakes did not give a precise timetable for when Bitcoin could begin taking a larger share of the gold market, but he laid out the conditions he believes would matter.
If the current trading pattern continues, if the Treasury expands its ability to impose fiscal control, and if more liquidity keeps entering the system, then Bitcoin rising alongside an expanding Treasury market and strong gold could be enough to change investor behavior, he said. Under that setup, even a small transfer of gold capital into Bitcoin could, in his example, push Bitcoin from $80,000 to $800,000.
The key variable, in his view, is whether investors become comfortable enough with Bitcoin’s downside risk. Once they do, he believes they will focus more on its return profile and its countercyclical value.
He said Bitcoin would strengthen its place as a hedge if it can sustain at least a year of countercyclical behavior, or if it responds positively during periods of monetary and fiscal expansion.
From stablecoin growth to “hyperbitcoinization”
The host also asked Yakes about a “hyperbitcoinization” path he had posted on X. That sequence included the Treasury promoting stablecoin adoption, stablecoins extending dollar dominance, weaker long-tail fiat currencies becoming dollarized, Bitcoin expanding as a reserve asset behind stablecoins, stablecoins becoming “Bitcoinized,” and fiat currencies eventually surrendering.
Yakes said this framework sits at the center of his thesis and then walked through it step by step.
Steps one and two: the Treasury promotes stablecoins, and stablecoins reinforce Treasury demand
Yakes said the U.S. faces severe deficits and a debt spiral. If investors lose confidence in Treasuries and stop wanting to hold them, debt values fall, which in his view leads to currency debasement and runaway inflation risk. That leaves the Treasury in urgent need of new large-scale buyers of U.S. government debt.
He said projections point to stablecoins growing from several hundred billion dollars today to several trillion dollars by 2030. If the stablecoin market reaches $5 trillion to $10 trillion, then compliance rules would require issuers to hold 100% or most of their reserves in short-dated U.S. Treasuries. That would effectively deliver trillions of dollars in Treasury buying power, he said, easing debt pressure materially.
Because of that, Yakes argued that the Treasury’s interests are closely aligned with the interests of the stablecoin sector, and that the Treasury will push stablecoin adoption globally to strengthen the dollar’s international dominance.
Step three: dollarization of weaker fiat currencies
In countries across the Global South, or in economies dealing with hyperinflation and poor international settlement systems, Yakes said people naturally look for assets that do not lose value as quickly. Stablecoins, powered by digital signatures and not constrained by the inefficiencies of the traditional international banking system, give those users direct access to dollar-denominated value.
In his model, that accelerates the erosion of weaker local currencies and pushes those economies further toward dollarization.
Step four: “Bitcoinization” of stablecoins and a return to free banking dynamics
As stablecoin issuers scale into the trillions, Yakes said competition will increasingly come down to yield and the hardness of reserve assets.
He cited Tether as an example, saying international issuers of that kind already hold more than $20 billion in gold and Bitcoin as excess reserves, roughly 5% to 10% of the total. He described stablecoins as an arbitrage trade: issuers take in user funds that cost them no interest, then buy interest-bearing or appreciating assets such as Treasuries or Bitcoin and keep the spread.
As the global financial system becomes more fragmented and concerns about Treasuries build over the long term, Yakes said issuers will need to prove their safety. He thinks that could push them toward something closer to historical free banking.
He referred to Scotland’s free banking era, when banks issued their own paper claims against underlying gold reserves, often at reserve ratios of 20% to 30%. From there, he argued that as Bitcoin’s liquidity and stability surpass gold, stablecoin issuers could keep raising Bitcoin reserve allocations — from 5% to 10%, then 20%, and potentially as high as 70% Bitcoin reserves with 30% liquid dollar reserves.
At that point, he said, stablecoins would in substance already be Bitcoinized.
Steps five and six: fiat surrender and “hyperbitcoinization”
Yakes then extended the argument further. If 30% to 40% of global payments eventually run through stablecoins that use digital-signature-based protocols, and if those stablecoins are largely backed by Bitcoin reserves, then moving from stablecoin payments to direct Bitcoin payments is only one button away from a user perspective, he said.
In that scenario, he argued, fiat currencies would struggle to compete with a form of money that is Bitcoin-backed, settles in seconds, and moves across borders natively. That, in his view, is how the system could reach hyperbitcoinization.
Does concentrated custody weaken decentralization?
The host raised a common concern from Bitcoin maximalists: if large amounts of Bitcoin end up inside trusts, ETFs, or centralized custodians such as Tether, does that create a path for control or censorship of the network?
Yakes said the concern is familiar but believes it overlooks the constraints imposed by free-market competition. He said he examined that mechanism in his work on free banking.
Historically, he said, free banking systems operated without a central bank. Private banks competed for gold deposits and issued paper claims against them. What kept such a system functioning for long periods was the combination of exit costs and substitutability.
Under a gold standard, users could theoretically withdraw their gold and hold it directly, but gold was heavy and awkward to use in a modern economy. Exiting the system and transacting outside it was expensive and inconvenient. Even so, banks still faced discipline.
Bitcoin is different, he said, because the marginal cost of self-custody and on-chain participation is much lower. Users do not need to move physical bars; they only need control of their private keys.
Yakes argued that if custodians such as Fidelity, BlackRock, or even government-linked entities tried to force control, alter the network, or impose restrictions, even a minority of self-custody users — 10% or less, in his example — would still hold the power to exit immediately and pull capital away. He said that exit option itself acts as a strong deterrent and forces custodians and governments to behave in line with customer interests.
What about wealth concentration?
The conversation also turned to concentrated ownership, including large holders such as Michael Saylor and early adopters.
Yakes said that pattern is common in the development of any new economic system. Wealth concentration tends to rise sharply in the early stage, then dilute over time as the system matures.
As Bitcoin’s market capitalization grows, he said, the cost of maintaining and defending large concentrations of wealth rises exponentially. He added that the market has already seen early holders sell into strength. Last year, he said, one early participant sold 80,000 BTC at the top.
His conclusion was that holders ultimately have to deploy wealth into real economic activity and consumption, making redistribution and decentralization an ongoing historical process rather than a static problem.
Epoch Ventures’ bet: making traditional finance Bitcoin-compatible
Asked how a venture investor tries to push Bitcoin adoption in capital markets, Yakes acknowledged that most venture firms today are chasing AI and stablecoins, leaving Bitcoin venture investing as a niche segment.
Epoch Ventures, he said, is focused on making the traditional financial system compatible with Bitcoin rather than assuming everyone will suddenly become a self-custody power user overnight.
That means meeting capital where it already sits and building the rails needed for incumbent financial institutions to use Bitcoin.
For Yakes, the fastest-growing, highest-arbitrage, and most disruptive segment in financial infrastructure today is Bitcoin-backed lending. Traditional commercial banks live on net interest margin, he said, and Bitcoin is the best collateral asset in financial history.
He said a community bank that shifts asset allocation toward Bitcoin-backed lending could potentially double its net interest margin. The bottleneck today, in his view, is that traditional financial institutions and community banks often lack technical understanding and face complex compliance hurdles. Yakes said Epoch is investing in the infrastructure needed to help those institutions build the required channels.
The article’s related reading section also referenced a Glassnode analysis on a supply wall between $81,000 and $86,000 after BTC rallied 26%.