The following dynamics are working in tandem make this one of the best times in recent history to start mining Bitcoin:

1. Bitcoin Bottom Formation

2. Declining Network Difficulty due to Ai Pivot

3. Limited Time Discounted Hardware Prices

4. BONUS: Tax Savings via 100% Bonus Depreciation

We’ve covered Bitcoin’s bottom formation extensively in recent newsletters, so today’s edition will focus more on the other dynamics; specifically, the largest miners in the industry pivoting to Ai and the resulting impact on mining difficulty, miner economics, and machine prices.

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An AI data center landlord earns roughly $0.18 per kWh in rent versus the $0.12 per kWh an S21 XP earns mining Bitcoin today, about 1.5x the revenue per unit of power. This opportunity cost for data center operators has led to the first ever mass exodus away from Bitcoin Mining; with the network hashrate down ~18% from the peak and 14% year-to-date.

Declining hashrate means “fewer hands in the cookie jar”; less miners competing for the finite amount of BTC that is mined daily (~450 BTC).

Looking exclusively at publicly traded Bitcoin miners (whose hashrate is quantified in public filings), they have turned off ~49 EH/s over the past two quarters.

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Hashprice is a blended cocktail of every market-related factor that impacts Bitcoin Miner revenue: BTC Price, Mining Difficulty, Halvings, and On-Chain Transaction Fees.

The measurable benefit of declining difficulty is evident here: Hashprice is up ~6% year-to-date despite Bitcoin itself being down ~10%.

Limited Time Offer: Bitcoin Miners Priced for $65,000 per BTC

On a short-term basis, there’s a lagging correlation between Bitcoin & the price of Bitcoin Mining servers (ASICs). Unlike BTC which trades 24/7/365 with billions of dollars of daily trading volume, ASICs, as physical, non-fungible, Bitcoin producing assets, have a far more fragmented market. However, because they are effectively “dividend producing assets”, with the dividend being BTC, the value of the dividend going up (ie BTC price going up) has a positive impact on miner demand can move the price of machines higher, all-else being equal.

One of the factors that can remove the “all-else being equal” is large supply of ASICs hitting the market from one of the large miners pivoting to Ai. This is the opportunity at present. Blockware has access to a limited-supply of extremely low-priced, refurbished Bitcoin miners (Antminer S21 XP 270T). Blockware purchased these machines before Bitcoin’s recent price pump. While supplies last, these are priced for sub $65k BTC. As this supply dwindles, it’s likely that machine prices will move higher. If this opportunity is of interest to you, email sales@blockwaresolutions.com to secure your share of the batch. Minimum deal size is $30,000.

The chart below shows the amount of months it will take to re-coup the cost of $100,000 worth of machines based on different BTC CAGRs (with tax savings included, assuming BTC is sold to pay monthly power costs). If you expect Bitcoin to break $110,000 over the next 12 months (~40% CAGR), the cost of the miners could be fully recouped in the first year.

Right now, these units produce Bitcoin at an effective price of ~$48,000 per Bitcoin. Conservatively assuming the trend of miner pivoting to Ai reverses, and difficulty begins rising, the breakeven price will jump to ~$105,000 by the time of the 2028 halving (~April 2028). At a modest 25% Bitcoin CAGR, these machines will continue operating profitably beyond the next halving.

But what happens if Bitcoin’s CAGR is just 10%? What if it’s 50%? We built a model to help you forecast this.

This model let’s you adjust multiple inputs: BTC Price CAGR, Difficulty Growth Rate, Uptime, etc. to forecast the economics of a Bitcoin mining operation and your potential tax savings.

Fill out the form here to access the model for free.

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Bitcoin has held it’s recapture of the coveted short-term holder cost basis. A resistance level which, when flipped, has historical signaled the transition from bear market to bull market.

The 50-week moving average is another level that has accurately dictated Bitcoin’s momentum / trend. Re-taking of this level has historical signaled a shift from bear to bull; and this is what is happening right now for Bitcoin.

Regular readers know that “narrative follows price”; not the other way around. Price follows supply & demand; price action dictates narratives and talking points.

One narrative that we expect to resurface over the next few months is the “debasement trade”; a hard money-based investment strategy balancing Bitcoin & precious metals. Ultimately, this is the foundation of our long-term Bitcoin thesis: an asset with a finite supply will go up forever when priced in an asset with an infinite supply. Following the mega-stimulus of 2020/21, we entered a new paradigm where this became abundantly clear.

The chart of BTC/Gold since the emergence of this new paradigm is a good reflection of the new reality:

“Risk Off” —> Gold performs well (BTC/Gold declines)

“Risk On” —> BTC performs well (BTC/Gold rises)

As BTC/Gold sits near the bottom of this multi-year channel (with a clear rebound forming), the risk/reward of BTC here is very attractive. BTC is currently trading at ~18 oz of gold. Reaching the all-time high of 40 oz implies a BTC price of ~$183,000/BTC (assuming the price of gold stays at approximately the same level: ~$4,400).

With the bottom forming at a ~50% peak-to-trough drawdown months before the “4-Year Cycle” would predict, Bitcoin has slayed yet another commonly held dogma; just as the 2022 bear market destroyed the pre-conceived notion that “bear market bottoms are above the previous all-time high.”

The final dogma remaining in Bitcoin is the notion of “diminishing returns”; each bull market' being smaller than the previous. This is one that makes more logical sense than the others: as an asset grows, exponentially more capital is required to achieve the same % returns. Furthermore, it’s essentially impossible for Bitcoin to repeat the multi thousand % gains from the early years.

However, it’s not out of the realm of possibility for future Bitcoin bull markets (including the one we are now in) to outperform the 2024 or 2021 bull markets. Looking at the recent performance of gold is a good indicator of what is possible. At it’s peak in Q1 of this year, Gold, with a market cap 10x larger than Bitcoin, was up ~90% on a year-over-year basis; having added ~$17 trillion in market cap over the prior 12 months. And on a trailing 2-year basis, it was up ~168%. If gold is capable of such out-sized returns, then don’t assume Bitcoin can’t do the same or more if the conditions are right.

Albeit, breaking the trend of “diminishing returns” is still unlikely; and it depends on your starting measuring spot: bear market bottoms or the beginning of halving epochs. That being said, Bitcoin started this halving epoch at $63,000, during the prior epoch it posted 655% returns, if does half of that during this epoch that would be a 327% return and the price would reach $269,000 in 2028.

We’re publishing a video later today on the Blockware YouTube channel (at Noon EST) where we break down the potential catalysts for such a rally in more detail. Make sure to subscribe and click the notification bell so you don’t miss it!

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Do you want to pay less taxes and stack more Bitcoin?

Mining hardware qualifies for 100% first-year bonus depreciation under Section 168(k), so the purchase is deducted against income in year one while the machines produce Bitcoin every month afterward.

Reach out to sales@blockwaresolutions.com or download our free mining guide at https://blockwaresolutions.com/info/ for more information.

The plan of the wealthy is to build a system around Bitcoin and other assets to create liquidity, produce income, and fund their lifestyle without selling what they own.

Tomorrow at 6pm EST, Blockware’s partner Mark Moss is hosting a free masterclass to explain his wealth building system. Click here to sign up for free.

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The Bond Market Just Broke an 18-Year Ceiling

Global bond yields are at levels most investors under 40 have never traded through. Bloomberg’s global government bond index yields 3.72%, the highest since mid-2008.

In today’s newsletter, we walk through the yield charts, and then answer the question every allocator should be asking right now: what has a 40% bond allocation actually done for you over the past decade, and what happens if you carve out a slice for Bitcoin.

The 30-year Treasury is trading near 5.3%, a level it hasn’t seen since 2007, and the 10-year is at 4.8%, its highest since January 2025.

The market is demanding more compensation to lend to the U.S. government for long durations, and the reasons aren’t hard to find: US & Global M2 at all-time highs, CPI running above target for a fifth straight year, and $40 trillion in debt with more than $1 trillion in annual interest expense.

The treasury doubled its long-bond buybacks on August 19 in an attempt to push yields down. The relief lasted about two weeks. By September 1 the entire move had been erased.

The U.S. 30-year hit 5.33% on August 18, a 19-year high. The 10-year gilt is at its highest since 2008, the 30-year gilt is at its highest since 1998, Japan’s 10-year crossed 3% for the first time since 1996, and the German bund is back at 2011 levels. This is happening in every major jurisdiction at once, which tells you it’s a structural repricing and not a one-country story.

And Japan, which anchored global rates near zero for three decades, now has a 10-year at 3.00% and a 30-year at a record 4.18%. Japanese institutions are the largest foreign holders of Treasuries, and for the first time in a generation they can earn a real yield at home. Every basis point the JGB rises is a basis point less reason for that capital to stay in U.S., U.K. or European debt. The zero-rate anchor that held global yields down since 2009 is gone, and even Fed cuts won’t necessarily bring it back.

Before we get to portfolios, look at what each asset actually did over the past decade:

$1 in the S&P 500 (with dividends reinvested) —> $4.19

$1 in Bitcoin —> $138

$1 in the 10-year Treasury —> $1.01

Ten years of holding the world’s benchmark safe asset returned one percent, total, before inflation. The coupon income was wiped out almost entirely by price losses as yields climbed from 1.6% to 4.8%.

One clarification on the bond number: this is a constant-maturity measure, meaning it holds the 10-year and rolls into the new 10-year every month, which is how a bond fund works and how the bond sleeve of a real 60/40 is actually held, in AGG, BND, IEF or a target-date fund. Those funds mark to market, so every time yields rose from 1.6% toward 4.8%, the coupon got eaten by price losses on the way. If you bought a single 10-year Treasury in September 2016 and held it to maturity, you avoided the mark-to-market and collected your 1.6% a year, about 17% total, plus your principal back this month. Now compare that to roughly 40% cumulative inflation over the same ten years. The buy-and-hold investor lost about a fifth of his purchasing power, the bond fund investor lost that and the price damage on top, and either way the asset that's supposed to be the ballast in the portfolio was the one that quietly lost money for a decade.

And along the way the 10-year suffered a 25% peak-to-trough drawdown, deeper than the S&P 500’s worst drawdown over the same window. The asset that’s supposed to be the “safe space” in the portfolio was the one that lost money for a decade.

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The chart below juxtaposes four portfolios: $1,000 invested on the first of every month for ten years, $120,000 contributed in total, rebalanced monthly to target weights.

Stocks are the S&P 500 total return, bonds are the 10-year Treasury total return, and Bitcoin is Bitcoin.

60% stocks, 40% bonds, 0% Bitcoin: $198,000 (9% IRR, 9% CAGR)

55% stocks, 3% bonds, 10% Bitcoin: $254,000 (14% IRR, 16% CAGR)

40% stocks, 40% bonds, 20% Bitcoin: $300,000 (17%, 22% CAGR)

60% stocks, 20% bonds, 20% Bitcoin: $360,000 (21% IRR, 25% CAGR)

Outperforming all of these is a removal of bonds entirely:

60% stocks, 20% gold, 20% Bitcoin: $445,000 (25% IRR, 28% CAGR)

The table below shows the Sharpe Ratio / Risk-Adjusted Returns for each of these portfolios as well as the % maximum drawdown.

The usual objection is that Bitcoin adds risk, so the extra return isn’t free. Sharpe measures return per unit of volatility above the risk-free rate, and it’s the standard measure of whether you’re getting paid for the risk you take.

The traditional 60/40 posted a Sharpe of 0.90. Every portfolio with a Bitcoin position beat that.

The 55/35/10 came in at 1.16, the 60/20/20 at 1.16, and the 40/40/20 at 1.08. The 10% allocation may be the sweet spot for most investors. It raised the annualized return from 9.7% to 14.4%, raised the Sharpe ratio by almost 30%, and pushed the max drawdown from 19% to 24%, a cost of 5 points of drawdown for nearly 5 points of annual return.

The 20% allocations produced more absolute return but with drawdowns near 30%, and their Sharpe ratios didn’t improve on the 10% version. Past 10%, you’re adding volatility faster than you’re adding risk-adjusted return. But if you’re comfortable with Bitcoin’s volatility, then this is no problem.

The 60/20/20 stocks, gold and Bitcoin portfolio posted a Sharpe ratio of 1.26, the highest of any allocation we tested. Over the past decade the best risk-adjusted portfolio wasn't the one with the safe asset in it. It was the one that replaced the safe asset with a hard assets

Every allocation hit its worst drawdown in the same month, October 2022, and that’s the most important signal.

In 2022 stocks fell 15%, the 10-year Treasury fell 15%, and Bitcoin fell 70%. The bond portion failed at the most important moment. The entire premise of the diversified portfolio is to have assets with inverse correlations; where bonds rise when stocks fall.

For investors with meaningful taxable income, there’s a way to build that Bitcoin position that the 60/40 can’t match.

Mining hardware qualifies for 100% first-year bonus depreciation under Section 168(k), so the purchase is deducted against income in year one while the machines produce Bitcoin every month afterward.

Reach out to sales@blockwaresolutions.com or download our free mining guide at https://blockwaresolutions.com/info/ for more information.

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The Bitcoin Bottom Is In

For the past two months we’ve had late August marked on our calendars as the time to look out for. The breakout we’ve been in hopeful anticipation of has taken place. In just 48 hours BTC ripped more than 20%, breaking out past the short-term holder cost basis and the 200-day moving average.

It has long been our view that “narrative follows price”, not the other way around. Price is set by marginal changes in supply and demand (more on that here); as such changes occur, price reacts. Humans, being emotional and pattern-seeking, look for cause and effect, narratives beyond supply/demand they can point to to account for the change in price. These narratives are often a byproduct of the price movement rather than the catalyst themselves.

That being said, there is one narrative around this weeks bullish price action that is of worthwhile note: The US Treasury providing support to long-end bonds. With bonds entering further into a grueling bear market, and the 30-Year rate at its highest level in 18 years, Treasury Secretary Scott Bessent announced a plan to double the size of long-end debt buybacks from $2B to $4B.

A portion of this move in Bitcoin may then be attributable to a decline in the dollar; the DXY is down 1% on the week and 2% on the month.

Furthermore, Bitcoin wasn’t the only hard money asset to catch a bid this week, Gold and Silver are up 5.5% and 7.7% respectively.

It was a big week for the Bitcoin ETFs. More than 20,000 BTC in net-inflows which is the most since October of 2025 (and this doesn’t even have today’s data yet).

“4 Year Cycle” followers have been convinced that Bitcoin must bottom in Q4 of this year with a ~75% drawdown from the peak. However, with the past six months of price action & on-chain data signaling the transfer of coins from weak hands to strong hands, classic bottom-formation behavior, its unsurprising that Bitcoin is divorcing itself from the calendar-based speculation.

BTC bear markets being a 50% decline rather than a 75% decline will cause a fundamental shift in the way institutional investors approach this asset. A 50% decline is much easier to hedge than a 50% decline followed by another 50% decline (which is what happens during a 75% drop).

Bitcoin’s compressed volatility over-time is quite evident when looking at the price performance by halving epoch. As it stands, BTC has hardly left the “0 to 100% returns” band this halving epoch.

With Bitcoin up 20%, the economics of a Bitcoin Mining operation become more attractive overnight. Below is a snapshot of a $100,000 deployment into Bitcoin Mining machines.

With tax savings factored in, a $100,000 deployment nearly pays for itself in just 12 months with Bitcoin at $77,000.

However, machine prices tend to be correlated with the price of Bitcoin. Blockware has a handful of remaining units from a batch of machines purchased with BTC below $65,000. If you’d like to purchase machines priced for sub $65k BTC, contact sales@blockwaresolutions.com (or fill out the form here).

The minimum deal size is $50,000 and closing funds must be delivered no later than next Friday.

Section 168(k) allows for 100% Bonus Depreciation of Bitcoin Mining servers.

Every dollar you spend on ASICs and electricity for your mining operation in 2026 can be used to offset your 2026 active income.

Join Mitchell Askew & John Haar of Blockware today, at 2pm EST, to learn how you can execute this strategy for yourself.

Attendance is 100% free. (A recording will be sent to registrants afterwards for those unable to attend the whole webinar)

Sign up here: https://www.blockwaresolutions.com/webinar

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July inflation data dropped this week; CPI came in at 3.4% & Core CPI came in at 2.5%. This is the second consecutive month of disinflation, following a 3-year high in May of ~4.16%.

Due to rising CPI levels in Q1 & Q2, the market began aggressively pricing in rate hikes for 2026 (despite no indication from Kevin Warsh that hikes are in the playbook). At the peak, the market was pricing a 93% chance of a rate hike in 2026, but those expectations are unwinding further after the latest CPI print; with the odds now down to 66%.

Energy prices (up 14% year-over-year) continue to be the primary driving force behind the higher relative inflation in 2026. As we’ve mentioned in previous newsletters, the war in Iran, although a negative catalyst for markets, appears to be fully priced in at this point.

If/when this conflict unwinds, energy prices will drop, geopolitical uncertainty will subside, and BTC will likely move higher in short order.

The higher energy prices are creating more pressure on the average consumer. US Retail Sales for July came in at negative 0.6%; well below expectations of 0.1%. A slowdown in consumer spending is another data point working against the expected interest rate hikes.

Furthermore, the July jobs report from the BLS reported a 23,000 decline in non-farm payroll employment; below expectations here as well and the 4th consecutive declining month.

For a Fed purportedly committed to being data-driven, the data is not inducive towards a rate hike.

Data supporting a rate hike:

• Higher energy prices

Data supporting a rate cut (or pause):

• CPI Disinflation

• Core CPI Disinflation

• Declining Consumer Sales

• Declining Nonfarm Payroll

Rate hikes being priced out of the market could be the demand catalyst that provides life to BTC.

Thankfully, Bitcoin doesn’t need a “demand catalyst” to move higher. Price is set based on marginal changes in supply and demand; and supply continues to constrain.

Long-term holder supply sits near all-time highs as convicted Bitcoiners have spent much of this year stacking and accumulating. The metric is slightly skewed at the moment due to ~200,000 BTC being moved in the 7 days following the coldcard hack. However, given the unique circumstances of this coin movement, it would be irrational to consider these coins as a large potential source of sell pressure.

Coin Days Destroyed provides confirmation that this movement was a one-time event (long-term holders adjusting their custody setup) rather than a continuous influx of supply into the market.

With just 4.5 months left in 2026, time is running out to orchestrate your tax mitigation strategy.

If you have active income you’d like to offset, Bitcoin Mining is the best tool available.

Our team is hosting a webinar next week to discuss how you can implement Bitcoin Mining & 100% Bonus Depreciation for the 2026 tax year.

Sign up here: https://blockwaresolutions.com/webinar

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RIOT Signs 20-Year, $9.1 Billion Ai Deal

RIOT Platforms ($RIOT) surged in after-hours trading on Tuesday following their press release announcing a $9.1 billion deal “with one of the world’s leading frontier AI labs.” It is widely suspected that the Ai lab in question is Anthropic.

This is an unsurprising trend continuation: large scale Bitcoin miners are pivoting their operations and treasuries into Ai. Not necessarily because Bitcoin or Bitcoin mining itself is a bad idea, rather, the demand from Ai labs for their data center capacity is so strong that they’re willing to pay $9.1 billion over 20 years.

At the start of the year, public miners held a combined ~127,000 BTC but their holdings are down to ~99,000 BTC today. Early year sales from public miners are an underdiscussed contributing factor Bitcoin’s poor price performance in 2026.

Mining difficulty continues to drop, down ~18% from it’s November peak in the longest stretch of declining hashrate in Bitcoin’s history. In other words, the rest of the miners are earning ~18% more Bitcoin now than they were 10 months ago. The exodus of the largest players in the industry is improving the economics for the miners that remain.

Bitcoin’s total network hashrate is unlikely to repeat the persistent growth rate it experienced for the first 16 years of Bitcoin’s existence.

The Blockware Team has put together a free guide to help you navigate the Bitcoin mining landscape in 2026; covering the how to acquire a 100% tax deduction via Bonus Depreciation and the current economics of a mining machine.

This guide is free to read. Fill out the form here and we will email you the guide.

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Bitcoin Remains Resilient Despite Bad Headlines

The market no longer reacting negatively to bad news is a strong sign that BTC is forming a bottom. In the past month alone, the following three negative headlines have surfaced:

• COLDCARD Hack

• Strategy Sells Bitcoin

• Clarity Act Falling Through

…but Bitcoin has remained stable regardless.

Headlines like this, while objectively negative, do not in anyway alter the Bitcoin protocol or the fundamental long-term thesis of convicted Bitcoin holders: a non-sovereign, bearer asset with a finite supply in a world of increasing government debt and fiat liquidity.

The only ones still holding Bitcoin 10 months into a bear market and down 50% from the all-time high are those with this thesis; and these headlines aren’t going to entice them to sell.

Bitcoin ETF Inflows

After months of net out-flows, the tides have turned for Bitcoin ETF AUM. Bitcoin ETFs saw ~7,895 BTC (~$511m) in net inflows this week. For reference, these inflows are ~2.4x the amount of new Bitcoin that entered circulation via mining during the same timeframe.

The initial reaction is that some of these inflows may be a reaction from cold-storage holders in response to the COLDCARD hack, but that’s likely just a small fraction. Users with BTC in cold storage with COLDCARDs looking for a new custody solution this week more than likely sent to a new self-custody wallet or a Bitcoin exchange; transferring into an ETF involves more extra steps and leaves less flexibility to return back to self-custody. “In kind redemption” (sending in BTC and receiving it as ETF shares in your brokerage account) is not available at smaller sizes; IBIT’s minimum is 40,000 shares (~$1.4 million).

Short Term Holder Realized Price

Short-term holder Realized Price inches lower day by day, now sitting at ~$68,000. We’ve been eye’ing late August as the time when the resistance is tested. The test could happen any day now as BTC is within a day’s worth of volatility of $68k.

If BTC breaks resistance here, there’s strong confirmation that the bottom is in.

Manufacturing PMI hit 55.6% in July, its highest level since May 2022. This was the seventh consecutive month of expansion, and the internals were strong across the board. New orders came in at 56.7. The employment index moved into expansion for the first time in nearly three years. AI data center capex, reshoring, and defense spending are pulling the industrial economy out of its multi-year slump.

This matters for Bitcoin because Bitcoin is a business cycle asset. PMI is one of the cleanest proxies for the global liquidity and credit cycle, and Bitcoin’s largest rallies have historically clustered in the expansion phase of that cycle, when PMI is rising through 50. Right now there is a glaring divergence. The business cycle is accelerating to a four-year high while Bitcoin trades at $64K, down ~50% from its highs and below the Short-Term Holder cost basis of $68K. One of two things resolves this. Either the ISM rolls over, or Bitcoin catches up to the cycle. Given that prices paid remain elevated at 71.1, the expansion is inflationary. An inflationary expansion is the single best macro regime for scarce, hard assets. Bitcoin is not diverging from the cycle. Bitcoin is lagging it.

The NASDAQ 100 has retraced much of its July loss, but it appears to be forming (another) lower high. As of Thursday, the index sits at 29,630, roughly 4% below its June peak near 30,800. Each rally since then has stalled at a lower level. Lower highs on declining momentum are the signature of a distribution phase, where large holders sell into strength. Tech equities have led this entire cycle on the back of the AI capex boom, so a topping NASDAQ raises an obvious question: if the AI trade is exhausting, where does that capital rotate next?

Bitcoin is the natural candidate. It is the most liquid hard asset in the world, it trades below its Short-Term Holder cost basis, and it has spent seven months consolidating while the NASDAQ made its highs. Capital rotates from crowded trades to neglected ones. The AI trade is crowded. Bitcoin is neglected.

Selling assets to fund a new investment triggers capital gains taxes and forfeits future compounding. Borrowing against those assets does neither. When the assets you hold appreciate faster than the interest rate on the debt, the spread compounds in your favor. This is the carry trade, and it’s one of the oldest wealth-building mechanisms in finance.

Our new white paper breaks down five ways to do it, with current rates and the honest trade-offs of each:

• Home equity (HELOC)

• Bitcoin-backed loans, and how to size LTV so a drawdown can’t touch you

• Securities-backed lines of credit

• SBA 7(a) loans

• 0% introductory APR credit cards

The final section applies the framework to Bitcoin mining, where 100% bonus depreciation under Section 168(k) means the tax code covers roughly a third of the machine in year one, before it has mined a single satoshi.

https://www.blockwaresolutions.com/leverage

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By now, you’ve no doubt hear about the COLDCARD entropy bug. (If you haven’t and you used a COLDCARD to generate your Bitcoin Seed Phrase, MOVE YOUR FUNDS ASAP). Over 1,400 BTC have been stolen the past week due to a bug discovered in the COLDCARD firmware.

Typically in this newsletter, we look at Bitcoin on-chain data to analyze supply/demand dynamics in an attempt to derive market alpha. Some of the same metrics we look at for market signal can help us visualize the scope of, and response to, the COLDCARD bug.

~197 million “Coin Days” have been destroyed over the past week. This measures how much BTC moves on-chain multiplied by how many days since each coin last moved.

This was the largest spike in 2026; showing that many COLDCARD users have been holding their Bitcoin for quite a long time. It’s not surprising, given the target demographic of COLDCARD; but it’s fascinating to see this confirmed by transparent, verifiable data.

This resulted in the largest weekly drop in “Long Term Holder Supply” in Bitcoin’s history. ~189,000 BTC, that were previously inactive for 6 months or longer, have been moved in the past week.

A large portion of these coins were likely sent to exchanges; with potentially vulnerable users sending to a “secure” location rather than establishing a new self-custody setup in haste. ~175,000 BTC were sent to exchanges over the past week (avg. of ~25,000 per day)

Despite the frightening headline (“Cold Storage Bitcoin Wallet’s Hacked”), BTC has had no reaction on the price side. In fact, 1-month realized volatility is at it’s lowest level since May.

It’s a good sign for the market that bad news is not being reacted to as such.

Furthermore, relative to the total Bitcoin trading volume, the ~1,400 BTC stolen is a non-factor. That’s not to downplay the significance of this event within the Bitcoin culture (or to be-little the impact on the victims), but as it relates to the Bitcoin market, this is a small amount of funds. Across all exchanges, ~60,000 BTC are traded daily.

In terms of dollars, Bitcoin trading volume has hit its lowest level since November of 2023 (right before Bitcoin came roaring back to new all-time highs);~$4 billion of BTC is traded daily right now.

If this situation has you re-thinking your Bitcoin custody setup, you are not alone. Bitcoin custody does not have a “one size fits all” answer. Each setup comes with trade-offs. In our most recent video, we discuss these trade-offs and rank the different types of Bitcoin custody.

Check it out:

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The Hike That Didn’t Come

The Fed held rates at 3.50 to 3.75 percent today. This is the 5th straight meeting with no change to the Federal Funds Rate.

Nine days before the meeting, markets put hike odds near 11 percent. By last Friday they were up to 38 percent. Citadel Securities told clients to expect an increase. UBS said one wouldn’t surprise them.

It didn’t happen.

Energy is volatile. Inflation, broadly, is still falling.

WTI sits near $82. It peaked around $94 in mid-July, fell to $78, and has been trading off Iran headlines in both directions since. Trump says talks with Tehran are going well. Oman has floated a mechanism for managing the Strait of Hormuz. This is a market repricing war risk week to week, and it’s well below the April highs above $105.

That’s the input the hawks are worried about. Now look at what the Fed’s own data says underneath it.

Core CPI came in at ~2.6 percent in June, down from 2.9 percent in May and 6.6 percent at the 2022 peak. The monthly reading was flat at 0.0 percent, the softest print outside a recession since 2017. Core goods, apparel, and transportation services all declined on the month.

Broad cooling, across every category that actually responds to the price of money. Shelter, services, goods. Decelerating all year.

Energy doesn’t work that way. Crude reprices on tankers and geopolitics, and no policy rate on earth produces another barrel. Gasoline fell 9.7 percent in June and pulled headline from 4.2 down to 3.5. The same arithmetic runs in reverse when crude rips, and it tells you nothing about whether money is too loose.

Loose policy shows up as broad price pressure. Broad prices are going the other way.

Which is the whole case for the hold. The Fed is looking at a volatile energy input sitting on top of two years of disinflation. Hiking into a supply shock tightens the economy without adding a single barrel of supply.

Expectations: Still Hawkish

According to the CME Fed Funds futures, the market is still pricing in a ~63% chance of a hike at the next Fed meeting in September.

Why hikes this year stay unlikely

The data. Warsh built five task forces. One on inflation, one on the data used to set policy. That apparatus exists to give the committee cover to look through a supply shock. It’s unlikely they build themselves this “out” and then hike rates because a war (temporary supply shock) increases energy prices when inflation metrics broadly are trending down.

The math. $39 trillion in debt, over $1 trillion a year in interest. A hike raises that bill immediately on every bill and note rolled at the front end (which is where a large %of current financing is coming from). There is no version of this where the Treasury’s largest line item gets more expensive on purpose.

The politics. Trump picked Warsh expecting easier policy. A hike is the most costly career move Warsh can and he’d be doing so less than 6 months into the job.

What it means for Bitcoin

Bitcoin is near $64,000, well off it’s Q2 high of around $80,000.

Bitcoin is priced for a Fed that hikes. The Fed just declined to hike, with its own core data cooling and $39 trillion in debt pulling the other direction.

We’ve watched what happens when that resolves. September 2024: first cut with Bitcoin near $60,000, roughly $108,000 three months later.

As the market begins to price hikes out of the equation, Bitcoin could react violently to the upside.

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When STRC IPO’d in July 2025, I believed three things to be true:

1. STRC would maintain a share price of $100.

2. STRC would allow Strategy to raise capital during bear markets, avoiding the need to issue MSTR when the stock isn’t trading at a premium to Net Asset Value.

3. STRC would funnel new pools of capital into the Bitcoin ecosystem by being accessible to portfolios with fixed income mandates.

So far, none of these things are true.

I want to be clear about what this piece is and what it isn’t. STRC is not inherently a bad asset. It’s a legitimate financing instrument that does real work for the corporation. The problem is that expectations were set for something it was never structurally capable of being. Overpromised, underdelivered. A meaningful share of the blame sits with the language used to market it. Furthermore, the shortcomings of STRC are being paid for by common stock shareholders through dilution.

1. There was never a peg

Part of the pitch was that Strategy was building a yield curve on top of Bitcoin, with STRC serving as the equivalent of T-bills or a money market fund. Short duration. Low interest rate sensitivity. Capital recoupable at any time.

Legally, STRC is the furthest thing from a short-duration liability. It’s perpetual. Perpetual is the antonym of short duration. There is no contractual requirement for Strategy to ever return the capital that STRC holders invested.

This is where the “digital credit” label falls short. It’s an inaccurate term for describing this product, and once you accept the term, you inherit a set of expectations the instrument cannot meet.

Consider what actually makes real credit behave the way it does. A bond has a fixed date on the calendar, established by legal contract, on which the issuer must return principal. That single feature is what drives the pricing behavior everyone associates with fixed income. As the maturity date approaches, the price becomes progressively less sensitive to changes in interest rates, issuer liquidity, and credit spreads, because there is progressively less uncertainty about repayment. The date is a gravitational pull toward par.

Long-duration credit behaves the opposite way. More time to maturity means more uncertainty about repayment, which means higher price volatility for any given change in rates or credit conditions.

STRC is as long-duration as duration can get. Infinite. And it’s somehow expected to trade like a money market fund.

So what actually holds the price near $100? Not a peg. “Par” is an arbitrary index value that exists to quantify the yield. When Strategy says the dividend is X%, the only thing that percentage is a percentage of is a $100 stated amount. Par is the denominator, not a promise.

In practice there are two mechanisms, and they’re asymmetric:

On the upside, Strategy can effectively stand as a perpetual ask at $100. If the price wants to run above par, the company issues more STRC into that demand. This works. It’s why STRC held par through underlying BTC price action.

On the downside, there is no equivalent. Nothing in the structure forces a bid at $100. The only tools available are discretionary: raise the dividend rate, buy shares back in the open market, or increase the dividend reserve (by diluting MSTR or selling BTC; both of which decrease BTC per Share). All 3 of these “tools” come out of the pockets of common shareholders (more on this below)

The asymmetry is measurable, and on the upside it’s absolute. Across STRC’s first 252 sessions, the highest close was $100.07. Not one session closed above $100.10, and 35 sessions closed pinned inside the ten-cent band just above par. Against that, 53% of sessions closed below $99, 12% closed below $90, and the low print was $74.57 on June 26, 2026.

Maximum upside overshoot: seven cents. Realized downside: twenty-five dollars and forty-three cents.

Run the sensitivity to Bitcoin and the ceiling shows up in the coefficients. When STRC sat at or above $98, its beta to Bitcoin on up days was statistically indistinguishable from zero while its down-day beta stayed positive and significant. Bitcoin rallied 2% or more on 23 of those sessions and STRC moved an average of 0.21%. The largest gain in that entire group was 1.04%.

Once STRC broke below $98, the asymmetry vanished and beta quintupled in both directions. There’s no ceiling below par, and there was never a floor.

And the first tool has already been tested. The dividend rate went from 9.00% at launch to 12.00% by July 2026, raised eight separate times, up 300 basis points in twelve months. Over that same window the price went from $89.95 to $88.32 and low-ticked $74.57. Strategy raised the coupon by a third and the instrument still lost a quarter of its value. Whatever the variable rate mechanism is for, defending par in a drawdown isn’t it.

The both-sides-of-the-ball problem

Strategy’s defenders tend to argue two incompatible positions depending on which side of the trade they’re describing.

A liability of perpetual duration is objectively excellent for a corporation. Fiat debases, and the liability gets easier to service in real terms every year. Capital you never have to return is the best capital there is. In this respect STRC is a genuinely great tool for Strategy. If I could borrow and never repay principal, I would too.

But you can’t hold that position and simultaneously describe STRC as money-market-equivalent.

When advocating for the corporation: look how great this is, they can borrow without ever returning the capital.

When advocating for STRC: look how great this is, you get a high yield and you can get your money back anytime.

Both of those cannot be true. The feature that makes STRC valuable to Strategy is precisely the feature that disqualifies it as a cash equivalent.

The Sharpe ratio was measuring the intervention

This deserves its own treatment, because the Sharpe ratio became Strategy’s headline proof that STRC was working.

On March 11, 2026, Saylor posted that STRC had crossed a Sharpe ratio of 3, with a chart showing 3.08 and STRC ranked above Alphabet, Nvidia, Tesla, and the S&P 500. By April, third-party coverage put the figure at 4.53 on 1.7% thirty-day volatility. On the Q1 2026 call, management described the goal as building the most stable, least volatile, highest Sharpe ratio credit instrument in the world, and worked through comparisons against junk bonds, investment grade, bank preferreds, the S&P, the Nasdaq, the Magnificent Seven, and hedge funds. They gave a target range of $99 to $101 and noted STRC had sat inside it 100% of the time across March, April, and May.

STRC IPO’d in July 2025 on a pitch about yield and stability. The Sharpe campaign arrived eight months later, after volatility had been compressed. The metric was retrofitted once it became flattering.

Here’s the arithmetic problem. A Sharpe ratio of 3 on an 11.5% coupon requires roughly 3% annualized volatility. There is no other way to reach that number. So the ratio was, mechanically, a measurement of how successfully Strategy was suppressing the variance of its own instrument. The company sets the coupon. The company was managing the price at par. Both inputs to the ratio were company-controlled.

Then look at what happened to the denominator once the defense stopped working. Thirty-day annualized volatility by month end:

The trough was 1.65% on May 14. The peak was 53.81% on July 20. That’s a thirty-fold increase in nine weeks. If the low volatility had been a property of the instrument, it would have survived contact with a Bitcoin drawdown. It didn’t.

Now the full year, on Strategy’s own dividend schedule. Thirteen dividends totaling $10.94 per share, a price move from $89.95 to $88.32, and the risk-free rate averaging 3.83% on 13-week T-bills:

Bitcoin over the identical sessions returned negative 46.74% for a Sharpe of −1.18. STRC on price alone, stripping out the coupon, was −0.25. Every dollar of positive return was the dividend.

So holders earned twelve percent in cash, gave back two percent in price, cleared six points over T-bills, and sat through a 24% drawdown to collect it. That is the realized profile of the instrument marketed as the short-duration layer of a Bitcoin yield curve.

Sharpe ratios need years of data to mean anything. With one year, the standard error on an annualized Sharpe is roughly 1.0, so my 0.27 carries a confidence interval wide enough to contain much better outcomes. But that same arithmetic is what destroys the marketed figures. A Sharpe of 3.08 estimated from a single month of returns carries a standard error of about 8. It cannot be distinguished from zero, or from twenty. Publishing it as evidence of engineered risk-adjusted performance was never statistically supportable, in either direction.

2. The bear market tool is being used for the opposite of its purpose

This is the part that actually costs shareholders money.

The historical playbook. In bull markets, MSTR has traded at a premium to the value of Strategy’s Bitcoin holdings. That premium created a genuinely accretive machine: issue MSTR above NAV, use the proceeds to buy Bitcoin, and BTC per share increases. Every shareholder ends up owning more Bitcoin than they did before, despite owning a smaller percentage of the company. Until 2025 this was Strategy’s primary purchasing tool, alongside convertible notes.

The limitation of that playbook. It only works when the stock trades at a premium, and the stock only trades at a premium in bull markets. Which raises the obvious question: how do you grow the Bitcoin position during a bear market?

That question matters more than the bull market case, because by definition Bitcoin is cheaper in bear markets. If your primary capital-raising tool is only available when Bitcoin is expensive, you are structurally forced to buy high.

This is why Strategy has been buying Bitcoin for nearly six years and carries a cost basis around $75,000.

Enter STRC. An instrument that raises capital regardless of mNAV. Capital available in the exact conditions the equity machine goes offline. Their own Q3 2025 guidance said as much.

What’s actually happening one year later. Strategy is issuing MSTR and using the proceeds to buy back STRC, in an attempt to push it toward the arbitrary $100 level.

The instrument was created to raise capital so the company could buy Bitcoin when Bitcoin is cheap. The company is now diluting common shareholders to defend the price of that instrument, during precisely the period when Bitcoin is cheap. The tool built to solve the bear market problem has become the bear market problem.

The mechanics are not ambiguous. When you issue MSTR and buy Bitcoin, BTC per share rises or falls depending on whether you sold equity above or below NAV. When you issue MSTR and retire preferred stock, the Bitcoin stack doesn’t move and the share count goes up. BTC per share falls. Unconditionally. There’s no price at which that transaction adds a single sat to the per-share number.

And you don’t have to read between the lines on intent. Public statements from both Michael Saylor and Phong Le have confirmed that the priority is not:

• increasing BTC per Share

• creating value for MSTR shareholders

• increasing the Bitcoin position

The priority is supporting STRC. Getting STRC back to $100.

Over the past two months, this has come at the expense of BTC per Share and BTC Yield; their once flagship KPIs.

Per-share Bitcoin rose in every month from January through May, peaking at 219,627 sats, up 12.64% from the December 2025 base. Then June came in at negative 4.01% and July at negative 3.39%. Compounded, that’s a 7.26% drawdown from the peak in two months. It has erased the entire Q2 gain and returned per-share Bitcoin to roughly where it sat in March.

Two consecutive negative months, on the company’s own flagship metric, while Bitcoin trades at a discount to where they’ve bought most of their stack. That is the cost of the STRC defense, denominated in the KPI Strategy spent the past 6 years inoculating the market to observe.

3. The fixed income capital has not shown up

The third belief was that STRC would pull new capital into Bitcoin. Capital sitting in fixed income mandates that couldn’t or wouldn’t buy spot BTC, an ETF, or MSTR common, but could hold a yield instrument. Expanding the buyer base rather than recycling the existing one.

Part 1 already explains why this was never realistic. A credit allocator screens on a short list of hard requirements, and STRC fails most of them:

• No maturity date. A perpetual has no defined duration, which means it cannot be slotted into a duration-managed portfolio. This is a threshold test, not a preference.

• Issuer-set coupon. The dividend rate is adjustable at the company’s discretion. No fixed income buyer accepts an instrument where the issuer controls their yield.

• Ratings and index eligibility. S&P rated Strategy B- in October 2025, five notches below the lowest investment grade. That's an issuer rating, and it doesn't attach to STRC. Preferred stock gets its own issue-level rating through notching, typically several steps below the issuer, which from B- means CCC territory. STRC carries no agency rating at all, which is why Strategy invented a proprietary "BTC Rating" and disclosed in its own footnotes that the metric isn't equivalent to a rating in the traditional sense. Even a rating wouldn't help. Bond benchmarks require a maturity, and the main fixed-rate preferred indices require a dividend that's actually fixed. STRC fails both by construction.

• Single-asset collateral. The coverage behind the dividend is one asset with a documented history of 70%-plus drawdowns.

So who actually owns it? Roughly 80% of STRC holders are retail, against about 40% for MSTR common. The instrument built to reach fixed income mandates ended up with a holder base twice as retail as the common stock it was supposed to protect from dilution.

That single number explains the price behavior. Retail yield buyers who found STRC through Bitcoin are already long Bitcoin. They’re not a net-new holder base. They’re the same pool of capital; correlated to the exact asset the instrument was supposed to be insulated from. When Bitcoin drew down, the marginal STRC buyer was drawing down too, so the bid disappeared at the same moment it was needed.

New pools of capital were not unlocked by this product. An existing pool of Bitcoin retail investors rotated in.

All three defense mechanisms victimize the common stock. Raising the dividend rate increases the recurring cash obligation, which is ultimately funded by equity issuance or Bitcoin sales. There is no version of defending STRC that common shareholders don’t pay for.

And the loop is potentially reflexive:

1. mNAV falls below 1.

2. The equity cushion sitting above the preferred shrinks in market terms, so the preferred looks riskier.

3. To defend the preferred, the company issues common at a discount and buys preferred back.

4. That issuance lowers BTC per share, which confirms the market’s reason for applying a discount, which pushes mNAV lower.

5. Return to step 2.

There are two exits. Bitcoin appreciates enough to fix the numerator, which is entirely outside management’s control. Or the company stops defending par and lets STRC trade where the market puts it, accepting a repricing in exchange for stopping the bleed.

They’ve chosen neither. They’ve chosen to fight step 3 with shareholder equity, which is the one lever that feeds step 4.

What would change my mind

Here’s what I’m watching:

• BTC per Share turns positive again and stays there for two or more consecutive months while STRC still trades below par. That would mean the defense is being funded from something other than common dilution.

• Buyback pacing tracks the discount rather than the distance to $100. Buying more when STRC is cheaper is capital allocation. Buying more when it’s closer to par is price support.

• Management reframes the objective publicly, from defending $100 to opportunistically retiring preferred below liquidation value. Same transaction, completely different mandate, and it would tell shareholders which scoreboard they’re being measured on.

• Evidence of an actual credit buyer base. A rating, index inclusion, or credit funds showing up in the filings would mean thesis three was early rather than wrong.

• Thirty-day volatility returns to single digits and holds there through a Bitcoin drawdown. Compressed volatility during a rally proves nothing. Compressed volatility while Bitcoin is falling would mean the stability is a property of the instrument rather than a product of the intervention.

Credit where it’s due

Two things deserve acknowledgment.

Strategy has continued to pay every dividend on the preferred stack through the drawdown. That is not trivial. Plenty of levered structures don’t survive their first real test, and honoring the obligation preserves the company’s ability to access that market again.

And they’ve remained a net accumulator of Bitcoin through the bear market. Whatever the per-share math says, the absolute stack has grown in an environment where most balance sheets went defensive.

Bottom line

STRC was pitched as three things: a stable instrument, a bear market financing tool, and a bridge to new pools of capital. It has delivered none of them.

The stability was structurally impossible, because a perpetual has no gravitational pull toward par and the only support mechanisms are discretionary and asymmetric. Zero closes above $100.10 and a low of $74.57 is what an absolute ceiling and a nonexistent floor look like in the data, and the Sharpe ratios marketed as proof of engineered stability were measuring the intervention rather than the instrument.

The bear market tool is now being pointed backwards, with common equity issued to defend the preferred instead of preferred capital deployed into cheap Bitcoin. And the new capital never arrived, because an unrated perpetual with an issuer-set coupon was never going to clear a fixed income mandate.

What’s left is a straightforward transfer. MSTR shareholders are funding STRC’s price. The company’s own headline metric has printed two consecutive negative months and given back the entire Q2 gain to do it.

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Bitcoin reached a local high of ~$66,000 earlier this week and currently trades at ~$63,900; wedged between two important moving averages:

200 Day MA: $72,446

200 Week MA: $63,356

Bitcoin crossing back above the 200-Day Moving Average has historically signaled the bear market has reached its trough; we’ll be eyeing a date with this level later in Q3.

On a near-term basis, it’s prudent to remain cautiously optimistic. Many longer term metrics are indicating “extreme value” / bottom formation (covered in-depth in this video). However, we’re also seeing net-outflows from Bitcoin ETFs over the past 30 days which could present headwinds over the next few weeks.

The short-term holder realized price is now at ~$69,000; Bitcoin’s test of this resistance level is likely to take place in the next 2 to 3 weeks. If BTC sustains a breakout above this key on-chain cost basis metric, that will provide strong confirmation that the worst of the bear market (price wise) is behind us. However, a failure to break resistance (like we saw in June) will likely lead to at least another 6 to 8 weeks of down or sideways price action.

The Ai-trade continues to cool off after an incredible Q2 performance. The semiconductor index ($SOX) is down ~16% from its June high, formulating a series of lower-highs throughout July. Likewise, the Nasdaq 100 ($NDQ) is down ~7% since early June.

At the forefront of the Ai industry, Samsung missed revenue estimates, in-spite of record high operating profits in Q2 of $325 billion (59% YoY increase).

Chip stocks led the entire risk asset complex higher in the first half of 2026, and their rollover drags liquidity and sentiment down with them. Our base case for the next 12 months is that a portion of this risk-on capital rotates back into Bitcoin as market expectations shift & Ai investors look to lock in profits.

Alongside the surge in oil (back to ~$90), market expectations of a hawkish Fed are surging higher. Based on CME futures, the market is now pricing in a ~93% probability that the Fed hikes rates by 50 basis points or more before the end of the year.

We believe these expectations are misaligned with the newly established frame work & tasks forces from Kevin Warsh. Energy prices are the primary forcing function here and the market is extrapolating a very linear conclusion: higher energy prices = higher CPI = Fed should/will hike rates. However, Warsh has still refused to submit a dot to the dot plot and has committed to overhauling the data guiding the Fed’s policy decisions. Energy prices are being forced higher entirely due to the U.S. conflict in the Middle East; which, optimistically, is a finite, one-time event, rather than a perpetually present inflation catalyst (like the 2020/2021 stimulus and subsequent inflation boom). The broader trend is that CPI has been in a gradual decline and Core CPI even more so; a Fed that is insistent on reacting to data holistically, rather than hyper focusing on one specific indicator, is likely to take this into account.

As far as Bitcoin is concerned here, this provides further evidence of present asymmetry. Bitcoin is being priced as if the Fed is going to hike, meaning a shift in expectations merely to keep rates the same, not even cuts, will likely result in Bitcoin moving higher.

Pressure continues to mount on the fiscal side. The US 10-Year Treasury is up nearly 50 basis points on the year and is on the precipice of its upper bound over the past 5 years. The rest of the yield curve has moved higher alongside the benchmark; with the 30-Year at ~ 5.14%, its highest since 2007. On the short end, the 2 year & 6 month treasuries are up ~80 and 40 basis points YTD respectively.

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Short-Term Holder Realized Price

Short-Term Holder Realized Price is Bitcoin’s most important near-term level. STH-RP sits at roughly $69,400 while spot trades near $64,000, a gap of about 8%. This is the aggregate cost basis of every coin that moved in the past 155 days, so it marks the exact price where the marginal buyer of the past five months breaks even. In bear phases it acts as resistance because underwater holders sell into strength to recover their capital. STH-RP has been grinding lower all year while price has chopped sideways since the February low, so the two lines are converging. On the current trajectory a retest lands in late August. A clean break and hold above would flip the average recent buyer back into profit and go a long way toward confirming $60K as a double bottom.

Long-Term Holder Supply

Long-Term Holder Supply spent Q1 and most of Q2 climbing aggressively, rising from roughly 14.43M BTC at the February low to a peak of 15.0M on June 22. That kind of accumulation pulls supply off the market and is exactly how price floors get built. Since the move back into the low $60,000s, however, the bid has cooled. The 30-day change in LTH Supply flipped negative on June 25 and currently sits at roughly -27,000 BTC. This is mild distribution, not aggressive selling, but it does mean the foundation building of the past two quarters is on pause. Watching for LTH Supply to resume its uptrend is one of the cleanest confirmation signals that the bottoming process is intact.

HODL Waves: Where the LTH Stagnation Is Coming From

The 1m–3m cohort collapsed from 6.1% to 1.6% of supply over the past six weeks, and that band represents every coin that moved hands between mid-April and mid-July. Those are the local-top buyers, the ones who accumulated all the way up from the low $60,000s into the strength toward $80,000 and beyond. They capitulated. The coins they bought are now in different hands at lower prices. Meanwhile the 1w–1m band exploded from 2.4% to 9.1% in the same window, meaning fresh buyers are constantly rotating in and out on shorter timescales instead of holding.

Here’s the key: coins that should be aging into the 3m–6m band, 6m–1y band, and beyond are getting trapped and recycled back into young hands instead of maturing into long-term supply. The pipeline is blocked. The long-term supply stagnation isn’t long-term holders dumping as much as it is short term cohorts not “graduating” into the long-term cohort anymore. The feeder bands below it are collapsing and re-spending instead of aging. Old hands remain dormant. This is capitulation by the recent relief rally cohort starving the long-term supply pipeline, not structural LTH selling.

Coin Days Destroyed (30D Moving Average)

Coin Days Destroyed sits at roughly 8.8M on a 30-day basis, up meaningfully from the March low of 5.2M but still only around the 45th percentile of the past five years. CDD weights every spent coin by how long it sat dormant, so low readings mean old supply is staying put. The recent uptrend deserves context before anyone reads it as smart money exiting. Network activity is at record levels, which mechanically lifts CDD even when the age profile of spent coins stays young, and the HODL Waves confirm that bands older than one year barely moved over the past six weeks. Rising CDD here reflects more total activity, not old coins waking up. That distinction matters. Genuine old-coin awakening this deep into a drawdown would be a red flag. Broad activity growth with dormant elders is neutral to constructive.

On-Chain Transaction Count at All-Time Highs

The 30-day moving average of daily transactions printed a record ~687,000 on July 14, up more than 90% year over year, and the monthly average has climbed every single month of 2026. This explains why CDD is drifting higher without any movement from older cohorts.

As for what’s catalyzing this surge in on-chain transaction count… that’s difficulty to say quite frankly. However, a surge in on-chain activity did coincide with the relief rally off the 2022 bottom.

Net Realized Profit & Loss (Market Cap Adjusted)

Net Realized P&L remains in a regime of net losses, meaning the average coin moving on-chain is being spent below its cost basis. The current regime began in late November 2025, and 222 of the 290 days since have printed net realized losses. Prior bears required substantially more pain before the regime flipped for good. The 2014-2015 bear logged 474 total days below zero, including an unbroken 333-day streak. The 2018-2019 bear logged 384 total days with a 314-day streak. The 2022 bear logged 347 total days with a 287-day streak. Call it 350 to 475 days of cumulative loss realization in a typical bear. At 222 days, this market is past the halfway mark of a normal capitulation phase but history suggests a few more months of loss-dominated conditions before a durable regime change.

Transfer Volume in Profit vs. Loss

More coin is moving at a loss than at a profit, and the gap is wide. The 30-day average shows roughly 65,000 BTC per day transacting below cost basis against 44,000 BTC above it, a ratio of nearly 1.5, with loss volume dominant since late November. The composition is what matters. Any coin still in profit at $64K was acquired in early 2024 or sooner, so profit-side volume is effectively a proxy for seasoned holder activity, and those holders are barely transacting. The selling pressure is coming from recent buyers capitulating below cost while the cohort sitting on actual gains refuses to distribute at these prices. Holders who have been through a full cycle know these levels are where you accumulate, not where you exit. This is the same on-chain fingerprint that marked prior cycle lows.

Year-over-Year Price Change

The year-over-year change in price flipped negative on January 15, 2026 and has now been below zero for 184 consecutive days, currently reading -46%. Every prior cycle bottom formed inside one of these negative windows, which makes duration a useful clock. The 2014-2015 bear spent 352 consecutive days negative, 2018-2019 spent 191, and 2022-2023 spent 490. The average across the three is roughly 340 days. At 184 days, this bear has nearly matched the shortest historical window and sits a little over halfway to the average. If this cycle tracks typical duration, the YoY reading flips back positive around year-end, which lines up with the base effect of comparing against the Q4 2025 drawdown rather than the highs.

1. Bitcoin mining is a North American industry, and it breathes with the seasons.

The majority of global hash rate now sits in Texas and elsewhere in North America, where miners run on interruptible power agreements. When summer heat drives grid demand up, mining sites curtail and send power back to the grid, the same mechanism that gives miners access to cheap power in the first place. The pattern is visible in the data: hash rate dipped during February’s winter storms and is dipping again amid the current Texas heat.

2. When sites curtail, difficulty falls.

Bitcoin recalibrates mining difficulty every 2,016 blocks (~2 weeks) based on realized network hash rate. Because curtailment hits large swaths of the network simultaneously, 8 of the 14 difficulty adjustments in 2026 have been negative, including -11.2% during February’s freeze, -10.1% in mid-June, and -5.0% on July 11.

3. Lower difficulty means more BTC per unit of hash rate.

Every negative adjustment increases the BTC earned per PH/s per day. After the July 11 adjustment, machines that are online earn ~5% more BTC per day than they did two weeks prior. This is the network’s smoothing mechanism: production paused during curtailment is partially recouped when machines come back online at lower difficulty. For miners, short-term downtime largely washes out over a full season.

4. Zoom out

Three years of network data show hash rate reliably running below trend in peak summer (June – September) and deep winter (January), then rebounding in the shoulder months. Curtailment season is as predictable as the Texas heat that drives it.

The takeaway for miners: diversification is the hedge. Fleets concentrated in one grid region carry that region’s full curtailment exposure, and air-cooled machines bear the brunt of extreme heat. Spreading across hosting locations, and building a mixture of air-cooled, hydro, and immersion machines, smooths both site-level and machine-level downtime.

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THE KEY POINTS

• Bitcoin trades at $63,181, down 49% from its October 2025 high of $124,715.

• Price just touched its 200-week moving average for only the fourth time ever. Each prior instance was higher a year later, median gain 116%.

• The average buyer from the last two years is underwater. The one-to-two-year cohort sits 27% below cost, while every holder older than two years is still in profit and not selling.

• Long-term holders control 74.5% of all Bitcoin, an all-time high, and added 443,000 coins over six months as price fell in half.

• Old coins are dormant and forced selling has faded. The capitulation that drove the June low is largely behind us.

• Realized Market Cap has fallen $62 billion, the second largest drop ever, yet stored capital is down only 5.5%. This holder base is far stickier than past bears.

• Buying Bitcoin during deep drawdowns has produced a positive twelve-month return between 83% and 93% of the time.

• Missing the ten best trading days in a year has historically erased the entire year’s gain. Consistent dollar cost averaging is how you stay present for them.

Bitcoin Sits On Its 200-Week Moving Average

The 200-week moving average is one of the most reliable long-term value floors in Bitcoin’s history. Price closed below it in early June for only the fourth time ever, bottomed at $58,544, and has since reclaimed the line. It now sits at $62,754 with spot at $63,181, so Bitcoin is trading right on top of it. In the three prior instances, the twelve-month forward return was positive every time, with a median gain of 116%.

Everyone Who Bought In The Last Two Years Is Underwater

This splits the supply into cohorts by how long each coin has been held and shows the average price each group paid. Every buyer from the last two years is now underwater, with the six-month to one-year cohort down the most at 38%. Every cohort older than two years remains in profit, some of them deeply so. That divide explains exactly who has been selling and who has been sitting still.

Price Below The 1-2 Year Cost Basis Only Happens At Bottoms

Here is the cost basis of the one-to-two-year cohort plotted against price, with the shaded regions marking every stretch price traded below it. This has only occurred during major bear market lows: 2015, 2018 to 2019, the 2022 to 2023 bottom, and now. Today spot is 27% below this cohort’s $86,908 basis, the fourth-deepest reading Bitcoin has ever recorded. The only deeper instances were the FTX collapse, the 2015 bottom, and the 2018 bottom.

Long-Term Holders Are Buying The Weakness

Long-term holders are wallets that have held for at least 155 days, the group that historically buys weakness and sells strength. Their supply just hit an all-time high of 14.94 million coins, or 74.5% of everything in circulation. Over the last six months, while price fell nearly in half, this group added 443,000 coins. The panic selling from newer buyers is being absorbed by hands that have no intention of letting go.

More Than 60% Of Supply Has Not Moved In A Year

HODL waves divide the entire supply by how long since each coin last moved. The green bands represent coins held longer than a year, and they now account for 60.9% of supply, up from 59.1% six months ago. When these older bands expand during a drawdown, the selling pressure is coming almost entirely from recent buyers. The deep base of the market is not participating in the sell-off.

The Old Coins Are Dormant

Coin Days Destroyed measures the economic weight of coins moving on-chain, registering high when old coins move and low when young coins move. Adjusted for supply, the metric sits at its 11th percentile since 2015, so the coins changing hands right now are overwhelmingly young. The long-term holders sitting on large unrealized gains have stayed still through the entire drawdown, which is the opposite of how tops form.

The Capitulation Has Already Happened

This tracks the amount of long-term holder supply sitting at a loss alongside the volume those holders sent to exchanges to sell. Loss-selling peaked in mid-June at 167,000 coins over a thirty-day window, precisely as price hit its low. It has since fallen to roughly 130,000 and keeps declining. The largest forced-selling event of this cycle is behind us and fading.

Capital Exiting, But The Base Is Sticky

Realized cap values every coin at the price it last moved, so it only falls when coins are sold below their acquisition price, and capital is leaving the network in the aggregate. That makes any decline a rare event confined to true bear markets. The current drawdown of 5.5% represents $62 billion in net capital lost, the second largest in dollar terms Bitcoin has ever seen. The percentage decline is far shallower than past bears of 14 to 24%, a sign this holder base is absorbing losses instead of fleeing.

What Has Happened After Buying That Condition

Taking every day in history when price traded below the one-to-two-year cohort’s cost basis, this shows what came next. Twelve months later the median return was 109% and the outcome was positive 97% of the time. At two and three years, every single instance was profitable, with median gains of 435% and 677%. Bitcoin is inside that exact condition today.

Miss The Best Days And You Miss The Year

This is the core case for staying invested rather than timing entries. In Bitcoin’s positive years, the ten best trading days delivered a median of 101% of the entire year’s gain. Strip out those ten days and five of Bitcoin’s ten winning years flip to losing years. A $10,000 buy and hold since 2015 grew to $1.97 million, yet missing just the ten best days cut that to $347,000.

Where You Buy Sets Your Cost Basis

This compares the average cost per coin under different dollar cost averaging rules since 2018, each buying $100 a day when its condition was met. Buying only during 30% or deeper drawdowns, the condition we are in today, produced the lowest average cost at $11,629. Chasing price near all-time highs produced the worst at $57,931. Buying weakness consistently beat buying strength by a wide margin.

The Deeper The Drawdown, The More Reliable The Return

This buckets every day from 2015 to 2025 by the market condition at purchase and shows the median twelve-month forward return. Buying during a 50% drawdown produced a positive result 93% of the time, against 75% for buying near the highs. The deeper the drawdown at purchase, the more dependable the outcome became. Bitcoin is 49% below its all-time high right now.

To Recap:

1. By multiple independent measures, price against the 200-week average, the cost basis of recent buyers, realized capital destruction, and holder behavior, this is one of the more compelling accumulation setups Bitcoin has ever offered.

2. None of these signals can call the exact low, and two of the past episodes ran for more than a year before turning. Anyone promising a precise bottom is guessing.

3. That uncertainty is the argument for dollar cost averaging rather than against it. Bitcoin’s largest single-day moves cluster inside drawdowns like this one, and missing them wrecks long-term returns. The dependable way to capture them is to keep buying through the discomfort, which means being in the market when it is cheap, as it is right now.

Surely this has been a bad time to be a Bitcoin miner… right?

Wrong.

Bitcoin Mining is not a short-term bet on BTC price action. That’s what options are for.

Bitcoin mining is a Tax-Efficiency and Dollar Cost Average strategy.

It’s purpose is to build a BTC position over a long-period of time in the most tax and capital efficient way possible.

In this newsletter we examine the past twelve months of a hypothetical mining operation:

• $300,000 per year earner living in NYC (32% Federal Tax Bracket)

• 10x Antminer S21 XP (2,700 TH) at ($7,020 per machine), hosted at $0.07/kWh, online July 6, 2025.

• Monthly power costs paid out of pocket (to resemble a “DCA” strategy).

• 0.4538 BTC accumulated in 12 months

• Effective acquisition price: $49,252 per BTC on power spend. Spot averaged $90,227.

• 74% more Bitcoin than a standard DCA spending the same amount per-month.

• $17,551 in federal tax savings

• Machines out-earned their power bill in all 12 months. The position funds itself if the miner ever wants it to.

The Strategy

Bitcoin mining is a dollar cost average program with two upgrades. The client deploys capital monthly, exactly like a DCA. The difference is what the dollars buy. A DCA buys coins at spot. A miner buys power, and the machines convert that power into coins at a steep discount to spot. And unlike exchange purchases, the capital is deductible: 100% bonus depreciation on the hardware under §168(k), electricity expensed as it’s paid.

This is a long-term treasury-building strategy. The price of Bitcoin along the way doesn’t change the plan. It only changes how cheaply the position gets built.

Steady Accumulation

Over the twelve months ending July 5, 2026, the fleet produced 0.4538 BTC. Monthly output stayed in a tight band around 0.037 BTC while price fell 42%, because production depends on hashrate share, not price. Revenue exceeded the power bill in every single month.

The Tax Advantage

Our model client is a single filer in New York earning $300,000 in W-2 income, running the operation as an active trade or business with material participation. Deductions totaled $92,551. That fully sheltered the mining income and left a $51,686 loss that offset salary.

New York decouples from federal bonus depreciation, so the state return depreciates the hardware over five years instead ($14,040 in year one, the rest carrying forward). The headline savings are federal. Mined coins also take a cost basis equal to their value when mined, so most of the eventual upside has a stepped-up starting point.

Same Dollars, More Bitcoin

Take the exact power dollars this client spent, $61.24 per day, and run them through a standard DCA instead. The DCA ends the year with 0.2601 BTC. The machines ended it with 0.4538 BTC. Same outflows, 74% more Bitcoin, plus hardware that’s still producing.

Mining turns a monthly power bill into a growing Bitcoin position and a smaller tax bill. You build a long-term treasury at a discount to spot while the tax code funds part of the entry, in bull markets and bear markets alike. See how the numbers work for your situation at blockwaresolutions.com/info.

Click here to read our free 2026 Q2 Market Update.

This Blockware Intelligence Report covers the key signals listed below:

Macro

• AI IPO wave. SpaceX listed at roughly $1.75 trillion, the largest debut on record. OpenAI (~$1T) and Anthropic (~$965B) are expected to follow. Combined, the three are worth about $3.7 trillion, ~13x more than every US company that went public in 2021 raised.

• Sector leadership. S&P 500 gains concentrated in AI-linked sectors: industrials, energy, and technology.

• Hyperscaler capex. Amazon, Microsoft, Alphabet, and Meta guided toward roughly $700 billion in 2026, up from about $410 billion in 2025.

• Manufacturing. ISM Manufacturing PMI reached 54.0 in May, a fifth straight month of expansion.

• Liquidity. M2 money supply is at a record level and expanding again.

• Gold. Rolled over after a two-year run, posting its worst quarter since 2013.

• June stall. Equity leaders flattened late in the quarter; the Nasdaq-100 consolidated and Nvidia sold off.

• Fed and inflation. The Fed held rates in June and markets price a pause. CPI is elevated on energy, which has since turned lower.

• Debt and yields. US federal interest expense is at a record above $1 trillion annually; US and Japanese 10-year yields are grinding higher.

Bitcoin On-Chain

• MVRV. About 1.13, in the 1.0 to 1.5 accumulation band.

• Long-term holders. Supply at a record near 14.8 million BTC; still accumulating.

• ETF flows. Record quarterly outflow of about 72,000 BTC, the cohort’s first major capitulation.

• Supply in profit. Fell below 50%, leaving the majority of coins underwater.

• Coin Days Destroyed. Subdued, in the lower fifth of its two-year range; old coins are not moving.

Strategy

• STRC. Broke its $100 par to about $75 before rebounding; it did not behave like a money-market instrument.

• Solvency. No default risk to MSTR; preferred dividends can be paid or deferred.

• BTC sales. The June 29 framework caps sales near $1.25 billion, a fraction of Bitcoin’s $20 to $30 billion daily volume.

• Dilution. The live risk is dilution. MSTR trades near 0.63x mNAV, below the value of its Bitcoin, so equity-funded buys now reduce Bitcoin-per-share.

Mining

• Hashrate. Rolled over roughly 16% from a late-2025 peak, from about 1,120 to 936 EH/s.

• Economics. Breakeven varies sharply by machine and power rate.

• Hardware. Efficiency has plateaued; no more efficient air-cooled ASIC has shipped since the S21 XP, roughly 20 months ago.

• Taxes. Mining hardware qualifies for 100% first-year bonus depreciation under Section 168(k).

Click here to read the report

It's a range, and where you land in that range comes down to two inputs: how efficient your machine is, and how cheap your power is.

Get both right and you're producing Bitcoin at a discount to the market price. Get both wrong and you're spending more on electricity than what your mined Bitcoin is worth.

Despite Bitcoin trading down ~50% from it’s all-time high, miners using the most-efficient machine on the market, the Antminer S21 XP, are still operating at a profit if their electricity rate is below $0.09/kWh.

• There is no universal mining cost. It’s a function of machine efficiency (J/Th) and electricity rate ($/kWh). Nothing else moves the needle as much.

• At today’s network size, the spread is enormous. A new S21 XP at 5 cent power mines a coin for about $33k. An older S19 XP at 9 cent power needs about $96k. Same Bitcoin, nearly 3x the cost.

• Efficiency alone is a 59% swing. At the same power rate, the S19 XP costs 59% more per coin than the S21 XP. That gap is pure hardware.

There’s a second layer here that changes the math. You don’t have to sell Bitcoin to cover your power bill. You can pay electricity out of pocket, often by prepaying it up front, and keep every coin you mine. That turns mining into a dollar cost average.

You buy the hardware once, then keep paying power out of pocket instead of selling your production, and every kilowatt-hour buys Bitcoin at your cost of production rather than the market price. For efficient gear that cost sits well below spot, so you’re accumulating at a discount. It also means a machine running underwater on a cash basis isn’t a reason to panic. You pay the power, you hold the coins, and as long as Bitcoin trends higher over your time horizon, those coins end up worth more than the electricity that produced them. Prepaid power takes the selling pressure off entirely and turns your power bill into a disciplined, discounted accumulation plan.

Want to see how to structure an operation exactly like this? Blockware is hosting a live webinar this Wednesday, July 1. We’ll walk through how prepaid power, hosted hardware, and the cost-of-production math fit together so you can accumulate Bitcoin below spot. Save your seat here: www.blockwaresolutions.com/webinar

The widespread consensus is that in inflation is hot and no cuts coming.

That read is wrong. And the reason is hiding in plain sight.

The market was grading a rate decision. Kevin Warsh, in his first meeting as Chair, wasn’t holding a rate decision. He was rewriting the rulebook. Once you see what he actually did, the hawkish story falls apart.

Five task forces, one direction

Warsh walked in and announced five task forces to review how the entire institution operates:

• Communications

• Data Used to Set Policy

• The balance sheet

• Productivity and jobs (including AI)

• Inflation

That’s every major lever the Fed pulls, all under review at once. No Chair in modern history has launched something this sweeping in week one.

Then he sent the signals. He gutted the policy statement. He killed forward guidance on purpose. And he refused to submit his own dot to the projections, while calling the dots his colleagues did submit “pencils, the kind with big erasers.”

Dropping forward guidance isn’t hawkish, it removes the pre-commitment that would box him in, so he can cut on his own timeline. The data task force builds the case to look past a lagged, flawed CPI print.

The inflation task force isolates energy as the thing distorting the headline number. And Warsh has argued for years that AI is a powerful deflationary force, which over time gives the Fed room to ease. Every road leads to the same place.

The tell: the dot plot is a coin flip

Here’s the single piece of evidence that the market misread the meeting.

The headline screamed that 9 of 18 officials see a hike this year. True. But that means the other 9 see rates holding or getting cut. The committee was a dead 9 to 9 split, and the median tipped to a hike by a single dot. Warsh himself didn’t even submit one, and he’s openly talking about scrapping the whole forecast.

So the market took a 9-to-9 coin flip, that the Fed Chair called low-conviction and wants to retire, and reported it as a hawkish hike signal. That’s the misread.

Energy is the only thing holding inflation up

Headline CPI ran about 4.2 percent in May. Core, which strips out food and energy, was around 2.9 percent. The entire gap is energy, and that traces back to the conflict with Iran and the disruption to the Strait of Hormuz, which moves roughly a fifth of the world’s oil.

Core was already cooling before the shock. Central banking 101 says you look through a one-time supply shock. And with a U.S.–Iran framework now announced, the one thing propping up the scary headline number may unwind on its own.

The forcing function: $39 trillion

This is what takes the thesis from “Warsh probably wants to cut” to “the math forces it.” The national debt just crossed $39 trillion. At an average rate near 3.4 percent, the government now spends over $1 trillion a year on interest alone. That’s more than the entire defense budget, and it eats roughly 14 cents of every federal dollar spent.

There’s one fast lever to slow that down. Lower rates. The gravitational pull of $39 trillion in debt points in exactly one direction.

The longer game matters too. Warsh wants to shrink the balance sheet now, and rate cuts and a leaner balance sheet aren’t opposites, they’re separate levers. But a government this indebted cannot survive sustained deflation, because falling prices make the debt harder to pay. If AI and other forces keep pressing prices down, the eventual escape is liquidity back in. A bigger balance sheet down the road. Warsh calls that an emergency tool. The debt may turn it into a certainty.

What it means for Bitcoin

We’ve seen this setup before. When the Fed started cutting in September 2024, Bitcoin was near $60,000. Three months later it had run to roughly $108,000. That’s about 80 percent in a quarter. From that first cut to the cycle high the following year, it doubled.

That’s the playbook when liquidity turns. Risk assets, and Bitcoin most of all, tend to front-run it. The market is staring at the wrong meeting. We’d rather be early.

Less taxes. More Bitcoin. What’s not to like?

You can write off 100% of the hardware & electricity costs of a Bitcoin Mining operation.

$100,000 spent on hardware + power = $100,000 deduction of active (W2 or Business) income.

This is the most tax-efficient way to build a long-term Bitcoin position.

Join us next Wednesday for a live webinar, co-hosted with 21st Financial to learn how you can implement this strategy for yourself: https://www.blockwaresolutions.com/webinar

This newsletter is for informational and educational purposes only and does not constitute financial, investment, or tax advice. Bitcoin and Bitcoin mining involve significant risk, including the potential loss of capital. Consult a qualified professional before making any investment or tax decision.

Bitcoin trades near $64,000 this week, down roughly 50% from its bull market high high. By the standard of previous bear markets, that is a shallow drawdown. The picture underneath the price is heavier than the price alone suggests.

Four separate on-chain conditions have moved into bottom-zone territory at the same time. Each one carries a long history of marking the floor of Bitcoin bear markets. Read alone, any single metric can mislead. Read together, they form one of the most reliable bottoming signals in Bitcoin’s history.

These four conditions have aligned only five times in 15 years. The fifth alignment registered last week.

Every prior instance marked a cycle bottom. One year later, Bitcoin traded a median of 130% higher. Two years later, the median gain was 499%. The weakest one-year outcome in the entire sample was still a 52% gain.

We never read a single metric in a vacuum. Markets are dynamic, and every data point needs context from the data around it. What follows is each of the four signals, the combined track record, and the one structural change that could weaken the pattern this time.

Source: Blockware Intelligence. BTC price, log scale. Data through June 16, 2026.

Here is what each of the four signals measures, where each one sits today, and why the confluence matters.

Signal 1: Percent Supply in Profit

Share of all bitcoin whose last on-chain move was at a lower price than today.

This metric measures the share of all bitcoin whose last on-chain move happened at a price lower than today. When it sits well above 50%, most of the network holds its coins at a gain. When it falls to 50% or below, roughly half of all coins in existence are underwater.

That lower condition is rare. It has only appeared at the depths of past bears: 2012, 2015, 2018, the March 2020 Covid crash, and 2022. The metric just dropped to that line again and reads near 50% today.

Bitcoin is only down about 50% from its high, which looks mild next to past cycles. The pain underneath that number runs deeper. Roughly half of every coin in circulation last changed hands above $63,000, which puts roughly half the market in the red. We can measure this precisely because every coin records the price at which it last moved on-chain. Pain at this scale has historically clustered at market bottoms.

Signal 2: The Hash Ribbon

Ratio of the 30-day to the 60-day moving average of Bitcoin network hash rate.

The Hash Ribbon compares the 30-day moving average of network hash rate against the 60-day moving average. When the 30-day average falls below the 60-day average, the ribbon is flaring, and that flaring signals miner capitulation. The ratio sits at 0.987 today, below the 1.0 line.

This is the signal we watch most closely at Blockware, because it speaks directly to mining economics. A flaring ribbon means miners are powering machines off, network hash rate is contracting, and difficulty is adjusting lower. Two forces are driving the current capitulation.

The first is the marginal operator. When Bitcoin traded above $100,000, a miner could run older, less efficient hardware at a higher power rate and still clear a profit. As price fell, that margin disappeared and those operators were forced to shut down. These miners are large net sellers by necessity. They sell most of the bitcoin they produce to cover power and operating costs. When they capitulate, that recurring sell pressure leaves the market, and the disciplined operators with efficient hardware and low power costs absorb a larger share of the block reward.

The second force is structural. The largest public miners are leaving Bitcoin mining to host AI compute. The infrastructure overlaps heavily. Land, power capacity, transformers, and containers all transfer from one use to the other. AI hosting contracts lock in consistent revenue for up to ten years, and some of those contracts pay more than mining produced even when Bitcoin traded at $125,000.

The result is a shrinking field of miners competing for a fixed block reward. Blockware clients are currently earning roughly 15% more bitcoin per machine than they were at the start of 2026. Every deep flare in the Hash Ribbon has coincided with a major bottom.

Signal 3: Cost Basis of Coins Acquired in the Last 2 Years

Supply-weighted average price paid by everyone who bought within the past two years.

This signal takes every coin acquired over the trailing two years and calculates the supply-weighted average price paid. That figure currently sits at $88,000. With Bitcoin near $64,000, the average buyer from the last two years is underwater by about 25%.

Price has only dropped below this two-year cost basis during bear markets: 2015, 2018, and 2022. Each of those instances proved to be a strong long-term entry point.

One caution belongs here. Price can remain below this level for an extended stretch. It stayed under the line for roughly a year in 2015, and the 2018 and 2022 episodes told a similar story. This level marks a favorable accumulation zone. It rarely calls the exact bottom to the day. Anyone entering Bitcoin should be working with a time horizon of at least four years. On that horizon, buying below the two-year cost basis has historically rewarded patience.

Signal 4: Long-Term Holder Position Change

30-day net change in the supply held by long-term holders.

The final signal measures the 30-day net change in supply held by long-term holders, defined as any wallet that has held its coins for six months or longer. When the reading is positive, long-term holders are accumulating. When it is negative, they are distributing.

There are only two reasons a long-term holder sells. The first is exuberance, which shows up at the top of bull markets when unrealized gains are largest. That is the source of the deep red spikes in 2013, 2017, 2021, and 2024. The second is capitulation, which shows up at the bottom.

Long-term holders capitulated in February when Bitcoin fell to $60,000. They released coins into the market, and those coins have been steadily absorbed by buyers since. Over the past three months the reading has stayed positive, with long-term holders now adding roughly 43,000 BTC over the trailing 30-day window.

The shift from capitulation to accumulation is the part that matters. Bitcoin’s supply is fixed, demand from the strongest hands is now net positive, and that imbalance tends to resolve through higher prices. The adjustment can lag, but the direction is set.

The Confluence

Each signal carries weight on its own. The reason this week matters is that all four are flashing at once.

Supply in profit near 50%. The Hash Ribbon flaring. Price below the two-year cost basis. Long-term holders accumulating. That specific combination has occurred only five times in 15 years, and every prior occurrence sat at a cycle bottom.

The forward returns from those bottoms were substantial. One year later, Bitcoin posted a median gain of 130%. Two years later, the median gain was 499%. The weakest single one-year result in the sample was a 52% gain.

The overview chart at the top of this issue also marks the near-misses, the moments when three of the four conditions lined up but long-term holders were still distributing. Those instances did not carry the same signal. The fourth condition, long-term holder accumulation, is the confirmation that turns three coincident signals into a historically reliable bottom. As of last week, that confirmation is in place.

If this alignment rhymes with the four before it, the implied floor is roughly $180,000 per bitcoin by the summer of 2028, with a median path closer to $375,000.

Turn the Money You Owe the IRS Into Bitcoin

The same miner capitulation that flashes as a bottom signal is also a direct tailwind for disciplined operators. As weaker miners power down and the largest public miners redirect their fleets toward AI compute, the bitcoin those machines would have produced is redistributed to the miners who remain. That is why Blockware clients are earning more bitcoin per machine today than they were six months ago, even with price lower.

A single filer earning $150,000 in 2026 will owe $24,734 in federal income tax. That capital leaves your balance sheet for good the moment the check clears.

Section 168(k) bonus depreciation offers another path. A Tier 2 Blockware package puts roughly $150,000 of enterprise mining hardware to work, and under current law you deduct 100% of that cost in the first year. That single deduction is large enough to offset $150,000 of income and take that federal tax bill to zero.

The money you would have sent to the IRS buys hardware instead. It runs at a locked power rate across our seven facilities and sends Bitcoin straight to your wallet every single day. A sunk tax expense becomes a Bitcoin-producing asset you own.

See the full strategy at blockwaresolutions.com/info.

This newsletter is for informational and educational purposes only and does not constitute financial, investment, or tax advice. Bitcoin and Bitcoin mining involve significant risk, including the potential loss of capital. Consult a qualified professional before making any investment or tax decision.