<div id="readability-page-1" class="page"><div><div><h2>Key Points:</h2><ul><li><p>Bitcoin rebounded in the first half of January, with reduced volatility: Over the past 30 days, Bitcoin has risen 12%, while volatility has decreased significantly.</p></li><li><p>Miners shift to AI as hashrate declines: Mining activity is trending downwards, with mining difficulty decreasing (-2%) and hashrate decreasing (-6%). This decline is partly due to miners shutting down their rigs to meet the explosive growth in demand for AI data centers.</p></li><li><p>DAT consolidation intensifies: Digital asset treasury companies (DATs) are facing market capitalization discounts, triggering a potential wave of mergers and acquisitions. We are highlighting the recent merger of Strive Inc. and Semler Scientific, and have identified Bitcoin Group, Empire Digital, and Sequans as potential acquisition targets.</p></li></ul><p>Bitcoin performed strongly over the past 30 days, rising 12%, while volatility decreased by 29% to 27.</p><p> Bitcoin's weakness over the past 30 days has led to a decrease in volatility, bringing it below the 13th percentile of its one-year volatility. After what many call a &#34;tax harvest&#34; that fueled the sell-off in early December (in reality, this year's sell-off appears to have started in October), Bitcoin's price surged in the first half of January. We believe Bitcoin's strong rally is attributable to several factors, including softer inflation data, concerns about the Federal Reserve's independence, optimism surrounding the CLARITY Act, and widespread oversold conditions. This optimism has led to $440 million in inflows into Bitcoin ETPs over the past 30 days, compared to $1.3 billion in outflows in the previous 30 days. In fact, between January 12th and 14th, 2026, Bitcoin ETPs saw inflows of $1.66 billion. The correlation between Bitcoin and the S&amp;P 500, measured by 30-day correlation, has gradually weakened, falling to 0.18. This is the lowest BTC/SP500 correlation since October 2025. Meanwhile, Bitcoin and gold are moving more in tandem, with a 30-day correlation of 0.28. The positive price movement of Bitcoin over the past 30 days has translated into a 7% increase in BTC open interest, reaching $32.4 billion. Although BTC open interest has actually decreased by 2.3% since December 15th, speculative demand has rebounded as the funding rate for Bitcoin 90-day perpetual contracts has risen from 3.7% in mid-December to 4.8%. Since October 2025, Bitcoin perpetual contract funding rates have been trending downwards. [Image source: Glassnode, as of January 15, 2026. Past performance is not indicative of future results. This article is not intended as a recommendation to buy or sell any of the securities mentioned.] Bitcoin's on-chain metrics are performing poorly, with most network health key performance indicators (KPIs) deteriorating, while some other on-chain metrics indicate improving supply dynamics. Some of the more concerning 30-day changes include: a 15% decrease in daily network revenue, a 6% decrease in active addresses, a 4% decrease in new addresses, and a 7% increase in active supply. These metrics suggest that Bitcoin block space demand has decreased due to fewer value transfers between new and existing users on the network. At the same time, the increase in active supply indicates that Bitcoin holders are shifting their holdings more widely. </p><h2>As hashrate declines, miners turn to artificial intelligence</h2><p>Bitcoin hashrate suffers its longest sustained decline since spring 2024</p><p><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7427961_watermarknone.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="312" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7427961_watermarknone.png"/></p><p>Data source: Glassnode, as of January 15, 2026. Past performance is not indicative of future results. This article is not intended as a recommendation to buy or sell any of the securities mentioned.</p><p>Mining activity continues to decline, with the 30-day average mining difficulty decreasing by 2% from 646 to 635, consistent with the expected 2% decrease in global miner power consumption from 206 TWh to 203 TWh.</p><p>Mining activity continues to decline, with the 30-day average mining difficulty decreasing by 2% from 646 to 635, consistent with the expected 2% decrease in global miner power consumption from 206 TWh to 203 TWh.</p><p> The 30-day moving average hashrate has declined by 6% since its peak in mid-November 2025. The simultaneous decline in mining difficulty, projected power consumption, and hashrate indicates that miners are shutting down their mining rigs. We believe this trend is partly attributable to seasonal power rationing during the winter, with companies like Riot receiving $6.2 million worth of electricity credits, a 113% increase from November 2025 and a 520% ​​increase from December 2024. However, we believe the larger, more systemic factor contributing to the decline in Bitcoin network hashrate stems from the deteriorating economics of Bitcoin mining due to the explosive growth in power demand for AI data centers. We expect demand for AI data centers to continue growing in the coming years, at a CAGR of 24% through 2030, and anticipate that Bitcoin miners will increasingly allocate power resources to AI infrastructure development. As Ben Gagnon, CEO of Bitcoin miner Bitfarms, pointed out in a recent interview with Wired magazine, &#34;High-performance computing (HPC) creates far more value per unit of energy, and this advantage will continue for years to come, so the company cannot justify continuing to invest in Bitcoin mining.&#34; A few bright spots have emerged in Bitcoin holder dynamics, which should offer some comfort to investors. On-chain transaction volume decreased by 11%, and miner transfers to exchanges also decreased by 6%. The decline in on-chain transaction volume indicates a lower &#34;turnover rate,&#34; as Bitcoin has changed hands less despite increased holder turnover. We believe the overall decline in Bitcoin turnover outweighs the impact of the aforementioned broad changes. </p><h2>Resilience of Bitcoin Long-Term Holders</h2><p>Average Bitcoin supply dormancy period exceeding 3 years since 2020: Approximately 38%</p><p><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7427962_watermarknone.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="310" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7427962_watermarknone.png"/></p><p>Data source: Glassnode, as of January 15, 2026. Past performance is not indicative of future results. This article is not intended as a recommendation to buy or sell any of the securities mentioned.</p><p>Over the past 30 days, we have observed positive changes in the net Bitcoin holdings of most long-term holder groups.</p><p> In the December ChainCheck report, we noted a significant decrease in Bitcoin dormancy for holders of 1-2 years, 2-3 years, and 3-5 years (month-over-month), with drops of 900, 1250, and 550 basis points respectively, while holders of 5 years or more saw an increase in their Bitcoin balances. The total dormant supply decreased by 380 basis points month-over-month in December due to selling by mid-term traders. In contrast, in January, losses for holders of 1-2 years, 2-3 years, and 3-5 years increased or slowed, with increases of 205, 174, and 213 basis points respectively. Furthermore, the supply of Bitcoin that has not traded for over 5 years increased by 176 basis points in the past 30 days, with 95,500 new Bitcoins entering these supply ranges. From the low point on December 15, 2025 to January 14, 2026, the proportion of Bitcoin that hasn't been traded for over a year increased by 69 basis points. Overall, medium-term holders are still selling Bitcoin heavily, but long-term holders appear to be choosing to remain on the sidelines. Which Bitcoin DAT company is most likely to be acquired in 2026? mNAVs had already declined before the Bitcoin price drop. </p><p><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7427964_watermarknone.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="310" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7427964_watermarknone.png"/></p><p>We believe one of the biggest challenges facing Bitcoin is the potential liquidation of its Bitcoin holdings by Digital Asset Custodians (DATs). DATs use financial means to continuously purchase more Bitcoin, a strategy that allows shareholders to consistently benefit from Bitcoin's price fluctuations. A key KPI for these companies is increasing the amount of Bitcoin held per share, which is typically achieved by raising funds through bond and equity securities to purchase Bitcoin. The best indicator of a DAT's health is its mNAV (market capitalization/Bitcoin market capitalization), as this reflects the DAT's ability to continuously purchase Bitcoin through financing.</p><p>To replicate Strategy's success, many DATs are expected to emerge in the spring and summer of 2025.</p><p> We estimate that there are currently 26 “true” DATs holding more than 1,000 Bitcoins. These DATs have purchased over 867,000 Bitcoins (4.3% of the circulating Bitcoin supply), worth approximately $82.5 billion. However, with the emergence of a large number of new BTC DATs, the mNAV of many DATs has declined. Of the 26 DATs holding more than 1,000 Bitcoins, only 6 have an mNAV exceeding 1.00. We believe this discount is a significant factor influencing Bitcoin prices because of the uncertainty surrounding the continued operation of these entities. If these companies are forced into liquidation, it will lead to a surge in Bitcoin selling. Therefore, many investors are concerned that the managers of these companies may sell off Bitcoins, triggering a market storm, before these companies achieve a healthy financial outlook. Since the financial condition of these companies is closely linked to the price of Bitcoin, if the price of Bitcoin rises, these companies can not only fund the purchase of new Bitcoins (thus pushing up the price of Bitcoin), but also extend their operating cycle. However, if the price of Bitcoin continues to fall, the dissolution of DAT in bankruptcy liquidation could trigger a sell-off in Bitcoin. </p><p>Options Open Interest (Millions of USD): MSTR vs. Mag7 and Index Comparison</p><p><img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7427963_watermarknone.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="367" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7427963_watermarknone.png"/></p><p>Source: Strategy as of January 16, 2026. Past performance is not indicative of future results. This article is not intended as a recommendation to buy or sell any of the securities mentioned.</p><p>However, DAT has another option: merger. We have already seen the nascent stages of DAT M&amp;A activity and believe this trend will accelerate. Given the advantages of larger DATs, we expect that ultimately only a few dominant DATs will emerge.</p><p> This is because DATs must rely on their debt, equity, and capital market liquidity to absorb the funds needed to purchase Bitcoin. The largest players often have the best liquidity. For example, although MSTR's market capitalization is only 1/60th the average size of Mag7 stocks, its open interest in options sometimes exceeds that of Mag7 stocks. Therefore, MSTR has a significant financial advantage relative to competitors who cannot effectively utilize financial markets. Over time, this dynamic should lead to larger players receiving a sustained mNAV premium relative to smaller players. Therefore, we predict that the optimal outcome for Bitcoin is for larger Bitcoin DATs to acquire smaller DATs at a discount. This dynamic would benefit both parties. Shareholders of the acquiring party could acquire Bitcoin at a below-market price, thus increasing the value per Bitcoin; while shareholders of the acquired party could compensate for the Bitcoin discount by receiving a higher mNAV. Of course, the definition of a &#34;fair deal&#34; is not clear for either party. However, the recent merger of Strive Inc. and Semler Scientific may offer some insights. </p><h3>Case Study: The Merger of Strive Inc. and Semler Scientific</h3><p>On September 22, 2025, as Bitcoin prices approached their 2025 peak, Strive Inc. (ASST) made a highly attractive merger offer to Semler Scientific (SMLR): 21.05 ASST shares for 1 SMLR share. The deal was initially valued at $1.42 billion, a 210% premium over SMLR's enterprise value. Despite SMLR's low price-to-book ratio (0.90), the implied premium was equivalent to purchasing Bitcoin at approximately 190% of its then-current market price. However, this valuation may have been inflated, as ASST's price-to-book ratio was approximately 4x at the time. Therefore, as ASST's price-to-book ratio decreased due to equity dilution from the transaction, the premium was expected to decrease as well.</p><p>By December 30, 2025, Bitcoin prices had fallen for several consecutive months, dropping 20% ​​since the first trading day in September. Most DATs fared even worse. ASST's stock price plummeted 73% from $2.75 the day before the merger announcement to $0.74, with its price-to-book ratio also falling to 1.2. SMLR's stock price fell 49%, and its price-to-book ratio further deteriorated to 0.77. Therefore, the transaction's premium was only 1.6% above the market price at the time. In this scenario, SMLR holders' mNAV would increase slightly to approximately 0.78. Simultaneously, ASST holders' Bitcoin holdings would increase from 8.5 BTC per million shares to 10.4 BTC per million shares. However, on January 16, 2026, the transaction was finally completed, and SMLR's mNAV was 0.87. On the other hand, SMLR shareholders' holdings of Bitcoin per share decreased from 332 BTC per million shares to 219 BTC. Meanwhile, ASST holders' mNAV also changed, decreasing from 1.37x to 1.06x the day after the merger. This shows that all parties were willing to make trade-offs to reach a deal. Potential Acquisition Target: BTC Holdings and Valuation Metrics Data Source: Bitcoin Treasury Net Asset Value as of January 16, 2026. Past performance is not indicative of future results. This article is not intended as a recommendation to buy or sell any of the securities mentioned. Looking ahead, we believe some ambitious DAT companies are highly likely to acquire another &#34;Bitcoin company.&#34; In our view, three companies stand out as potential acquisition targets: Bitcoin Group, Empire Digital, and Sequans Communications. All three have a market capitalization (mNAV) of less than 1 and hold enough Bitcoin to make a legitimate acquisition profitable. We believe Empire Digital is the most likely candidate. Headquartered in Germany, Bitcoin Group has been one of the most secretive cryptocurrency companies we follow. Despite its seemingly profitable business, its share price is among the most heavily discounted in its industry. The company reported €1.8 million in profit for 2024. Bitcoin Group operates the cryptocurrency exchange Bitcoin.de and a cryptocurrency custody business. A major obstacle is that the company owns and operates a regulated financial services entity in the EU, making it difficult for any acquirer to acquire it quickly or easily. Acquirers would need regulatory approval and considerable patience. In addition, Bitcoin Group has a major shareholder, Priority AG, holding over 25% of the voting rights. However, given its significant share price discount, it remains attractive to sophisticated buyers who can circumvent these pitfalls. Emery Digital is nominally a &#34;power sports/off-road vehicle&#34; company. In reality, however, the business unit's performance is negligible, projected to generate only about $200,000 in revenue in the third quarter of 2025. The company's greater appeal lies in its substantial net asset value discount, but any potential buyer must contend with complex corporate governance and anti-takeover mechanisms. Shareholders have limited ability to quickly change boards. Directors can only be removed or replaced at a formally convened shareholders' meeting; shareholders cannot convene special shareholders' meetings, which severely restricts rapid board turnover. This makes initiating and winning proxy fights under time pressure more difficult. Furthermore, Delaware law can restrict certain business merger activities for up to three years if the acquiring party holds more than 15% of the shares, effectively delaying the merger process. The board also has the right to issue preferred stock, which can be used to dilute equity or otherwise block unsolicited takeover offers. In other words, patient acquirers like DAT could wait until the next annual shareholder meeting in May 2026. If the mNAV discount persists, market movements leading up to the shareholder meeting could become quite interesting. Overall, given the more familiar jurisdiction of Empery, it appears to be a better acquisition target than Bitcoin Group, but any merger or acquisition process is more likely to be a gradual one rather than an impending event. Sequans' primary concern is its structural complexity. Headquartered in France, the company has subsidiaries across multiple jurisdictions, including the UK, US, Singapore, Israel, and Finland. Any buyer will be taking on a complex system involving multiple countries, meaning more steps and higher procedural risks. Sequans also has an operational business. It's a fabless semiconductor company that was profitable in 2024 with net profits of approximately $57 million. This is crucial because acquirers cannot view it as a simple balance sheet acquisition. Operating a business requires separate valuation and a decision on whether to manage it long-term or sell it off, which could lead to more complex structures, such as spin-offs or divestitures, or force the acquiring party to operate a business they may not be familiar with. In terms of acquisitions, France adds another hurdle. Under French acquisition rules, a shareholding exceeding approximately 30% triggers a mandatory tender offer. This makes it difficult to quietly increase shareholding and quickly complete an acquisition, making the entire process slower and more procedural. Furthermore, the board has tools that can make it more difficult for external acquirers, such as diluting the potential acquirer's equity through share issuance or favoring friendly parties. Similar to Emery, the actions of the board and shareholders follow a set meeting schedule, increasing time and market risks. Finally, as a semiconductor company, it is subject to government scrutiny. French authorities can review and potentially restrict foreign buyers, undoubtedly adding another layer of uncertainty. Given the numerous challenges faced by potential buyers, Sequans is the least attractive among these companies.</p></div></div></div>

<p>Bitcoin has rebounded 12% in January with reduced volatility. Mining activity is declining, with a 2% drop in difficulty and a 6% drop in hashrate, as miners shift focus to AI data centers. Digital asset treasury companies face market cap discounts, leading to potential mergers. Bitcoin ETPs saw $440 million in inflows recently, contrasting with previous outflows. However, on-chain metrics show a decline in network health, with decreased daily revenue and active addresses. The trend indicates miners are shutting down rigs due to economic pressures and seasonal power rationing, while AI demand grows.</p>

- Bitcoin experienced a 12% increase in price during January while volatility decreased significantly, driven by factors such as softer inflation data and optimism around regulatory developments.  
- Mining activity has declined due to miners shifting resources towards AI data centers, leading to a reduction in both hashrate and mining difficulty, and raising concerns over the economic viability of Bitcoin mining.  
- Digital asset treasury companies are facing market capitalization discounts, resulting in potential mergers, with Bitcoin Group, Empire Digital, and Sequans Communications identified as likely acquisition targets in this evolving landscape.

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