DAiM Issue 55

“Bitcoin doesn’t care if you’re early or late. It just pays those who stay.”
― Dan Hollings

1. Accumulation Range - Over the past several months, investor attention has increasingly shifted toward metals. Gold has captured headlines as capital seeks inflation protection, geopolitical hedges, and perceived safety. Meanwhile, bitcoin has remained range-bound, consolidating rather than trending aggressively higher.

   From our perspective, this environment closely resembles early last year, a period when bitcoin quietly absorbed supply, volatility compressed, and sentiment cooled before the next leg higher developed.

   Markets do not move in straight lines. Accumulation ranges often form when legacy holders finish distributing inventory and longer-term investors gradually rebuild exposure. That process takes time. Price action becomes frustrating, narratives fade, and impatient capital looks elsewhere for momentum. This is exactly the type of backdrop where durable bases tend to form.

   Importantly, bitcoin does not require a new headline-grabbing demand story to move higher. Similarly, gold does not rally because of new narratives, it moves because capital rotates, liquidity shifts, and positioning becomes stretched in one direction before reversing. The same capital dynamics apply to bitcoin.

   In fact, gold’s recent performance is beginning to show signs of being extended. Historically, after strong multi-quarter advances, gold has experienced meaningful retracements, approximately 25% following the 2008 peak and roughly 20% after the 2020 surge. While past performance does not predict future results, these examples illustrate that even strong secular trends undergo corrective phases.
   

   

   
   As we discussed last month, gold is already operating in what we would consider a stretched performance zone. If metals enter a consolidation or pullback phase, capital does not disappear, it rotates. Positioning into bitcoin during accumulation, rather than chasing performance after rotation begins, has historically offered more favorable risk-reward profiles for patient investors.

   At DAiM, we continue to view the current range not as a sign of weakness, but as constructive base-building similar to prior accumulation phases. Quiet markets often precede decisive moves, especially when sentiment and attention are focused elsewhere.

2. Wallets Selling - One of the most useful ways to evaluate whether an accumulation phase is nearing completion is by observing how higher-value wallets behave during drawdowns.

   Historically, both bull market corrections and bear market declines have been accompanied by reductions in the number of bitcoin addresses holding more than $1 million in value.These periods typically reflect older holders distributing inventory, reallocations by large holders, or forced selling during volatility events. What matters is not just that these wallets decline, but how much price damage occurs relative to how much supply is transferred.

   During the peak of November 2021 and the subsequent bear market, the number of addresses holding more than $1 million declined by roughly 28%. Over that same period, bitcoin’s price experienced an approximate 60% drawdown. That was a full capitulation phase, significant wallet attrition accompanied by deep price compression.

   In the current cycle, we have already seen a similar contraction in high-value holders, approximately a 25% decline, yet price has only retraced roughly 30%, or about half the magnitude of the prior bear market decline. In other words, a comparable amount of selling activity has occurred with materially less downside impact on price.

   This divergence suggests that underlying demand is absorbing supply more efficiently than in prior cycles. When large amounts of potential selling pressure are worked through without significant price degradation, it often reflects improving market structure and strengthening hands accumulating inventory.

   This dynamic supports the broader accumulation thesis. If much of the historical selling pressure has already been processed, the remaining consolidation phase may be shorter than many investors expect. While timing markets is never precise, the current data implies that the accumulation range could be approaching later stages rather than early formation.

   Additional on-chain indicators, including wallet dormancy metrics, also point toward older coins becoming increasingly inactive again, a pattern that has historically aligned with base formation and long-term accumulation behavior rather than distribution.

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3. Bullish Activity

   MicroStrategy (MSTR) continues aggressive bitcoin accumulation.
   In mid-January, MSTR added approximately $2 billion of bitcoin in a single purchase, reinforcing its long-term strategy of converting corporate balance sheet capital into hard digital assets. Management has publicly signaled ambitions toward materially expanding holdings over time, further tightening available supply in liquid markets.

   Leverage positioning is beginning to unwind rather than expand.
   Leveraged long positioning appears to be rolling over from elevated levels. Historically, when excessive leverage resets and speculative positioning clears, markets often transition into healthier, more sustainable advances rather than fragile, liquidation-driven moves.

   Institutional sentiment continues to improve at the highest levels.
   Recent commentary coming out of Davos reflected increasingly constructive narratives around digital assets, with positive signals from policymakers, institutional allocators, and technology leaders. While narratives alone do not drive price, improving institutional comfort tends to support longer-term capital adoption.

   Long-term holder supply remains elevated despite recent volatility.
   Coins held by long-duration wallets continue to represent a historically high percentage of circulating supply. This suggests that conviction among longer-term investors remains intact, even as shorter-term participants rotate and rebalance during consolidation phases.

   ETF and institutional access continues to deepen market liquidity and participation.
   Spot bitcoin ETFs have materially expanded access for traditional investors, advisory platforms, and retirement plans by standardizing custody, pricing, and reporting. One of the most underappreciated demand sources ahead is corporate 401k plans incorporating bitcoin exposure into model portfolios. At DAiM, we have supported bitcoin allocations in retirement structures since 2020, gaining early experience in integrating digital assets alongside traditional investment frameworks. ETFs transform that complexity into a conventional, familiar structure, lowering barriers for plan sponsors and accelerating potential adoption over time.

4. Noteworthy

   Deferred Fee Account - We are proud to announce a new partnership with Structures Inc., enabling attorneys to defer taxation contingent fees while gaining exposure to a market-based investment strategy that includes bitcoin. If you want to learn more, email us at hq@DAiM.io.

   Strategically Held - Our new podcast. The only place where you will hear real stories about building meaningful wealth with digital assets. Listen to the first episode here: