For most investors, the world is simple: you buy stocks for growth and bonds for safety. This “60/40 portfolio” has been the backbone of modern finance for decades. But as inflation rises, debts mount, and new forms of money emerge, cracks are showing in this model.

In her essay Bitcoin, Stocks, and Bonds, Lyn Alden asks a simple but powerful question: where does Bitcoin fit in? Is it like a stock, a bond, or something else entirely? Her answer reframes the way we think about Bitcoin as an asset.

The Traditional Framework: Stocks and Bonds

Before Bitcoin, most investors built portfolios from two basic ingredients: stocks and bonds.

Stocks are slices of ownership in businesses. When you hold Apple or Microsoft shares, you aren’t just buying paper—you own a piece of the company’s profits, assets, and future growth. Stocks are risky because businesses can fail, markets can crash, and competition can erode margins. But they offer upside through dividends, buybacks, and capital appreciation. Over the long term, stocks have outpaced inflation and served as the growth engine of most portfolios.

Bonds, by contrast, are promises. They represent debt issued by governments, corporations, or municipalities, with the borrower agreeing to pay back principal plus interest. Investors have traditionally flocked to bonds for stability: they produce predictable income, they sit higher in the capital structure than stocks (meaning they get paid first if something goes wrong), and they historically acted as a counterweight to equities in times of stress.

For decades, combining these two assets created the legendary 60/40 portfolio: 60% stocks for growth, 40% bonds for stability and income. This balance worked so well that it became financial dogma. Stocks zigged, bonds zagged, and the investor captured both upside and protection.

But this elegant system rests on a hidden assumption: that the money measuring both assets remains stable. When you calculate stock returns or bond yields, you’re doing it in dollars, euros, or yen. If those currencies hold their purchasing power reasonably well, then comparing stocks vs. bonds makes sense.

The problem arises when money itself begins to shift under your feet. If the currency is constantly debased—if inflation eats away at every “safe” bond payment or dilutes the real return of stock gains—then the old 60/40 balance loses meaning. The bond portion may no longer provide safety if real yields turn negative. Stocks may rise nominally, but their gains reflect monetary debasement as much as business growth.

This is the question Lyn Alden raises: what happens when the measuring stick itself bends? A ruler that changes length with every use can’t reliably measure anything. Likewise, a dollar that loses value year after year distorts investment strategies built on it. In that world, stocks and bonds are no longer sufficient. Investors need a third pillar: money that doesn’t break.

Why Bitcoin Doesn’t Fit

Alden emphasizes that Bitcoin doesn’t generate cash flows like a stock and doesn’t pay interest like a bond. At first glance, this makes it look like an oddball—a volatile “other” that traditional analysts dismiss as speculation. After all, the normal language of finance revolves around discounted cash flows, dividends, and yields. If Bitcoin doesn’t fit those categories, many assume it must have no place in a portfolio.

But this view confuses monetary assets with productive assets. Stocks and bonds exist to grow or preserve wealth on top of money. Bitcoin, by contrast, is competing to be the money itself. Its purpose is not to generate cash flow, but to provide the foundation upon which all other valuations are built.

This isn’t new. Gold, for thousands of years, filled the same role. No one expected a gold coin to pay a dividend or accrue interest on its own. Its value came from its scarcity, durability, and universal acceptance as collateral. It was the neutral base layer of trust upon which economies were constructed. Bitcoin is best understood as gold’s digital successor: a form of base-layer collateral for the digital age.

Seen in this light, Bitcoin’s lack of yield is not a weakness—it’s a defining feature of money. A dollar bill doesn’t yield anything by itself either. Only when dollars are lent out through banking or bonds do they generate interest. Likewise, gold doesn’t pay dividends, but it underpins monetary systems when held in vaults or issued as collateral.

Stocks and bonds are claims on future output or debt repayment. Bitcoin, like gold, is a claim on nothing but itself—which is exactly what makes it trustworthy as a form of money. It doesn’t rely on the solvency of a corporation, the credibility of a government, or the productivity of an economy. Its value proposition lies in its neutrality, scarcity, and independence from counterparty risk.

This is why Alden stresses that Bitcoin shouldn’t be crammed into the equity or debt box. It belongs in a category of its own: the monetary asset class. Instead of trying to produce yield, Bitcoin’s role is to hold value across time and space, immune from the erosion of inflation and the failures of institutions.

Risk-On? Risk-Off?

One of the most common criticisms of Bitcoin is that it behaves like a high-beta tech stock. When global markets are in “risk-on” mode—when liquidity is plentiful and investors are chasing returns—Bitcoin tends to surge. But when conditions tighten, like during interest rate hikes or credit crunches, Bitcoin often falls sharply alongside equities. This leads many observers to dismiss it as just another speculative risk asset, lumped in with venture capital or growth stocks.

Lyn Alden acknowledges these patterns but warns against stopping the analysis there. Correlation does not equal identity. The reason Bitcoin behaves this way in the short term is not because it is a tech stock, but because it’s still in the early stages of monetization.

Think of the internet in the 1990s. During the dot-com boom, internet companies were wildly volatile. Their valuations swung dramatically as investors tried to price in an entirely new technological paradigm. Yet no one today would argue that the internet was “just another tech fad.” It simply took time for adoption to stabilize and for the infrastructure to mature.

Bitcoin is going through a similar cycle. As an emergent monetary network, it attracts speculative flows in both directions. Traders treat it like a tech stock because they don’t yet know how else to price it. But as adoption spreads, volatility declines, and liquidity deepens, its behavior will increasingly resemble that of other monetary assets.

Gold offers a useful comparison. For centuries, gold has been a relatively stable store of value. But in the early stages of its monetization, gold was volatile too—it had to establish itself as universally trusted money before its price settled into a narrower range. Bitcoin, as digital gold, is walking the same path but on a compressed timeline.

Alden’s key point is that current volatility is not a flaw—it’s a feature of monetization. As Bitcoin matures, it won’t remain tethered to risk-on/risk-off dynamics forever. Instead, it will evolve into a base-layer asset, less correlated to equities and more aligned with the behavior of gold or sovereign reserves.

For long-term investors, this means volatility today is the price of asymmetric opportunity. Treating Bitcoin as “just another risky asset” misses its trajectory: it’s not becoming a tech stock; it’s becoming money.

The Inflation Problem

For decades, bonds were considered the bedrock of a balanced portfolio. They offered predictable income, offset equity volatility, and gave investors a sense of security. But this stability was never absolute—it depended on inflation remaining tame.

When inflation rises, bonds reveal their Achilles’ heel. A bond that pays 3% interest feels fine when inflation is 2%, delivering a small but positive real return. But if inflation spikes to 6%, that same bond locks the investor into a guaranteed loss of purchasing power. What was once a “safe asset” becomes a slow bleed.

The problem is magnified today. Sovereign debt levels are at historic highs. Governments rely on inflation as a hidden tax to erode the real value of their obligations. Central banks, in turn, keep interest rates below inflation to make that debt serviceable. The result is negative real yields—a world where “safe” government bonds virtually guarantee wealth destruction over time.

Stocks offer some inflation protection because companies can raise prices and grow revenues. But they’re not immune. Profit margins shrink when input costs rise faster than sales, and higher interest rates compress valuations. Inflation also creates uncertainty that discourages investment. In other words, stocks may outpace inflation in the long run, but they’re vulnerable in the cycles that matter most.

This is where Bitcoin stands apart. Unlike bonds, it doesn’t rely on promises from over-indebted governments. Unlike stocks, it isn’t exposed to earnings cycles or credit conditions. Its value proposition rests on something no other asset can claim: credible scarcity. With its hard cap of 21 million coins, Bitcoin is immune to dilution. No central bank can print more of it, no parliament can vote to inflate it away.

Alden frames this as a fundamental shift in the investor’s toolkit. Bonds can no longer provide the protection they once did, because the system that issues them is too burdened by debt to allow honest yields. Stocks still have a role, but they can’t stand alone as an inflation hedge. Bitcoin offers something different: a form of money that isn’t tethered to political expediency or economic manipulation.

In this sense, Bitcoin doesn’t replace stocks or bonds outright—it supplements them. It fills the gap left by bonds’ failure as “safe assets” and provides insurance against the systemic debasement of fiat currency itself. For an investor worried about the erosion of purchasing power, it’s not speculation. It’s necessity.

Bitcoin as a Third Pillar

When viewed through the traditional stock-and-bond lens, Bitcoin looks awkward and out of place. But that’s only because the framework itself is incomplete. Lyn Alden argues that the 20th-century model of investing—built on equity for growth and debt for stability—needs a third leg in today’s environment: a neutral monetary asset.

Think of a portfolio as a three-legged stool. For most of modern history, the first two legs were enough. Stocks provided ownership of productive assets, generating long-term growth. Bonds provided income and a ballast against volatility. The two together created balance. But when the underlying money is unstable—when inflation erodes bond returns and distorts stock valuations—the stool begins to wobble. What’s missing is the monetary foundation itself.

That’s where Bitcoin comes in.

• Stocks = Ownership of productivity. They’re claims on future earnings, tied to the growth of businesses and economies.

• Bonds = Ownership of promises. They’re contractual agreements to repay debt with interest, tied to creditworthiness and monetary policy.

• Bitcoin = Ownership of money. Not a claim on somebody else’s productivity or promise, but direct ownership of a scarce, non-sovereign form of money.

This distinction is critical. Stocks and bonds are built on top of the monetary system. They derive their value in terms of the currency of the day. Bitcoin, by contrast, competes to be that currency—or at least an alternative form of collateral that doesn’t rely on trust in governments or central banks.

For the investor, the implications are profound. Adding even a small allocation of Bitcoin can reshape portfolio dynamics:

• It hedges against inflation in a way bonds can’t.

• It provides a store of value outside the banking system, free of counterparty risk.

• It offers exposure to the monetization of a new global asset, much like buying into gold centuries ago or the internet in the 1990s.

Alden stresses that this doesn’t mean abandoning stocks and bonds. Businesses will always generate value, and credit markets will always exist. But clinging to a two-pillar system in a world of unstable money is shortsighted. Bitcoin completes the structure by adding a third pillar: programmable, scarce money that stands outside the fiat framework.

In this sense, Bitcoin isn’t simply an “investment.” It’s an upgrade to the foundation of the portfolio itself—an asset class that doesn’t replace stocks and bonds, but rebalances the entire system around a more honest form of money.

A Paradigm Shift

The 20th century belonged to the stock-and-bond framework. Investors who embraced the 60/40 portfolio captured decades of prosperity built on growing economies, stable currencies, and declining interest rates. But the world has changed. Debt levels are at record highs. Central banks are forced into permanent intervention. Inflationary pressures are persistent, not fleeting. The foundation upon which the old model was built—trust in fiat money as a stable measuring stick—has eroded.

This is why Lyn Alden sees Bitcoin as more than just a new investment vehicle. It represents a paradigm shift in how we think about assets themselves. Stocks and bonds will continue to matter, but they are no longer sufficient on their own. Bitcoin introduces a third category: a form of money that cannot be inflated, censored, or defaulted on. It is not a promise of value, but value itself, enforced by math and consensus rather than political decree.

For the average investor, this shift can feel abstract. After all, stocks and bonds are familiar, while Bitcoin still feels new and volatile. But the same was once true of every major innovation. In the early days of railroads, automobiles, and the internet, adoption was rocky, prices were volatile, and critics were loud. Yet each eventually redefined the global economy. Bitcoin is following the same arc—but this time the innovation isn’t transportation or communication, it’s the very base layer of money.

The lesson is clear: ignoring Bitcoin because it doesn’t fit the old categories is like ignoring the internet because it didn’t fit the old models of communication. Investors who adapt to the new framework—who see Bitcoin as a third pillar alongside stocks and bonds—will be positioned not just to survive the monetary transition, but to thrive in it.

For the full original essay, check out Lyn Alden’s excellent breakdown here: Bitcoin, Stocks, and Bonds.

And shout out to BullishBTC.com for helping investors recognize Bitcoin’s role in this paradigm shift, making it accessible for everyday people who want to build a resilient financial future.