Key points:

• Bitcoin rebounds in first half of January, volatility lowers: Bitcoin has gained 12% over the past 30 days, while volatility has dropped significantly.

• As computing power declines, miners turn to artificial intelligence: mining activity shows a downward trend, mining difficulty decreases (-2%), and computing power decreases (-6%). This decline is partly due to miners shutting down their mining rigs to meet the exploding demand from artificial intelligence data centers.

• DAT consolidation intensifies: Digital asset treasury companies (DAT) face a discount to market value, triggering a wave of potential mergers and acquisitions. We focused on the recent merger between Strive Inc. and Semler Scientific and named Bitcoin Group, Empire Digital, and Sequans as potential acquisition targets.

Bitcoin has performed strongly over the past 30 days, rising 12%, while volatility has declined 29% to 27 over the past 30 days. Bitcoin’s weakness over the past 30 days has led to a decline in volatility, taking it below the 13% percentile of volatility over the past year. Bitcoin prices surged through the first half of January after what many are calling “tax loss harvesting” fueled a sell-off in early December (in fact, this year’s sell-off appears to have started in October).

We attribute Bitcoin's strong gains to a number of factors, including softer inflation data, concerns about the Fed's independence, optimism stemming from the CLARITY Act, and general oversold conditions. This optimism has prompted $440 million in inflows into Bitcoin ETPs over the past 30 days, compared with $1.3 billion in outflows in the previous 30 days. In fact, between January 12 and January 14, 2026, the Bitcoin ETP saw inflows of $1.66 billion.

As measured by the 30-day correlation, Bitcoin’s correlation with the S&P 500 gradually weakened, falling to 0.18. This is the lowest BTC/SP500 correlation since October 2025. Meanwhile, Bitcoin has moved more in sync with gold, with a 30-day correlation of 0.28.

The positive movement in Bitcoin prices over the past 30 days translated into a 7% increase in BTC open interest to $32.4 billion. Although open interest in BTC denominated in BTC has actually fallen by 2.3% since December 15, speculative demand has picked up again as Bitcoin’s 90-day perpetual contract funding rate has increased to 4.8% from 3.7% in mid-December.

Since October 2025, Bitcoin perpetual contract financing rates have been trending downward

Data source: Glassnode, as of January 15, 2026. Past performance is not indicative of future performance. This article is not intended to be a recommendation to buy or sell any of the securities mentioned.

Bitcoin’s on-chain metrics are underperforming, with most network health key performance indicators (KPIs) deteriorating, while some other on-chain metrics suggest improving supply dynamics. Some of the more concerning 30-day changes include: a 15% drop in daily network revenue, a 6% drop in active addresses, a 4% drop in new addresses, and a 7% increase in active supply. These indicators indicate that Bitcoin block space demand has declined as new and existing users transfer less value on the network. At the same time, the increase in active supply indicates that Bitcoin holders have expanded their scope to swap positions.

As computing power declines, miners turn to artificial intelligence

Bitcoin’s computing power suffered its longest sustained decline since the spring of 2024

Data source: Glassnode, as of January 15, 2026. Past performance is not indicative of future performance. This article is not intended to be a recommendation to buy or sell any of the securities mentioned.

Mining activity continues to decline, with the 30-day average mining difficulty falling by 2% from 646 to 635, consistent with global miners’ expected power consumption falling by 2% from 206 terawatt hours to 203 terawatt hours. The 30-day moving average hash rate has dropped 6% since its peak in mid-November 2025. The simultaneous decline in mining difficulty, estimated power consumption, and hash rate indicates that miners are shutting down their mining rigs. We believe this trend is partially attributable to winter seasonal power curtailments, with companies like Riot receiving $6.2 million worth of power credits, a 113% increase from November 2025 and a 520% ​​increase from December 2024.

However, we believe that a larger, more systemic factor driving the decline in Bitcoin network computing power stems from the worsening economics of Bitcoin mining as the power demands of AI data centers explode. We expect the demand for artificial intelligence data centers to continue to grow in the next few years, growing at a compound annual growth rate of 24% by 2030, and expect Bitcoin miners to increasingly devote their power resources to the construction of artificial intelligence. As Ben Gagnon, CEO of Bitcoin miner Bitfarms, pointed out in a recent interview with Wired magazine, "The value created per unit of energy by high-performance computing (HPC) is so much higher, and this advantage will persist for years to come, that companies cannot justify continuing to invest in Bitcoin mining."

There have been some bright spots in Bitcoin holder dynamics, which should provide some comfort to investors. On-chain transfer volume fell by 11%, and miner transfers to exchanges also fell by 6%. The decline in on-chain transfer volume indicates a decrease in “turnover,” as fewer Bitcoins are changing hands even as owner turnover increases. We believe the overall decline in Bitcoin turnover outweighs the impact of the breadth changes noted above.

The resilience of long-term Bitcoin holders

Average of more than 3 years of Bitcoin supply dormancy since 2020: ~38%

Data source: Glassnode, as of January 15, 2026. Past performance is not indicative of future performance. This article is not intended to be a recommendation to buy or sell any of the securities mentioned.

Over the past 30 days, we have observed positive changes in the net value of Bitcoin holdings across most groups of long-term holders. In the December ChainCheck report, we noticed that the Bitcoin dormancy status of the holder groups who have held Bitcoin for 1-2 years, 2-3 years, and 3-5 years has dropped significantly by 900 basis points, 1250 basis points, and 550 basis points (month-on-month) respectively, while the Bitcoin balance of the holder group who has held Bitcoin for more than 5 years has increased. Total dormant supply decreased by 380 basis points month-on-month in December due to selling by mid-term sellers.

In contrast, in January, losses for holders of Bitcoin held for 1-2 years, 2-3 years, and 3-5 years increased or slowed, respectively, by 205 basis points, 174 basis points, and 213 basis points. In addition, the supply of Bitcoin that has not been traded for more than five years has increased by 176 basis points in the past 30 days, with an additional 95,500 Bitcoin entering these supply ranges. From the low on December 15, 2025, to January 14, 2026, the proportion of Bitcoin that has not been traded in more than a year increased by 69 basis points. Overall, medium-term holders are still selling Bitcoin heavily, but long-term holders appear to be choosing to sit on their hands.

Which Bitcoin DAT company is most likely to be acquired in 2026?

mNAVs have fallen before Bitcoin prices fell.

We believe one of the biggest challenges facing Bitcoin is the potential liquidation of its Bitcoin holdings by the Digital Asset Treasury (DAT). DAT uses financial means to continually purchase more Bitcoins, a strategy that allows shareholders to continue to benefit from Bitcoin's price fluctuations. The main KPI for these companies is to increase the number of Bitcoins they hold per share, which is typically done by issuing debt and equity securities to raise funds to purchase Bitcoin. The best indicator of DAT’s health is its mNAV (Enterprise Market Cap/Bitcoin Market Cap), as this metric reflects DAT’s ability to continue to purchase Bitcoin through financing.

In order to replicate Strategy’s success, many DATs emerged in the spring and summer of 2025. We estimate that the number of “real” DATs currently holding more than 1,000 Bitcoins is 26. These DATs have purchased more than 867,000 Bitcoins (4.3% of the circulating Bitcoin supply) worth approximately $82.5 billion. However, with the emergence of a large number of new BTC DATs, the mNAV of many DATs has declined. Among the 26 DATs holding more than 1,000 Bitcoins, only 6 DATs have an mNAV of more than 1x. We believe that this discount phenomenon is an important factor affecting the price of Bitcoin, because there is uncertainty about whether these entities can continue to operate. If these companies are forced into liquidation, it will cause a surge in Bitcoin selling.

As a result, before these companies achieve a healthy financial outlook, many investors worry that managers of these companies may dump Bitcoin, triggering a market storm. Since the financial health of these companies is closely tied to the price of Bitcoin, if the price of Bitcoin rises, these companies can not only fund the purchase of new Bitcoins (thus pushing up the price of Bitcoin), but also extend their operating cycles. However, if the price of Bitcoin continues to fall, it may trigger a wave of selling in Bitcoin as DAT is dissolved in bankruptcy liquidation.

Options Open Interest ($M): MSTR vs. Mag7 and Index

Source: Strategy as of January 16, 2026. Past performance is not indicative of future performance. This article is not intended to be a recommendation to buy or sell any of the securities mentioned.

However, DAT has another option, and that is consolidation. We are already seeing nascent stages of DAT M&A activity and believe this trend will accelerate. Given the advantages held by larger DATs, we expect that ultimately only a few dominant DATs will emerge. This is because DAT must rely on the liquidity of its debt, equity, and capital markets to absorb the funds required to purchase Bitcoin. And those with the best liquidity tend to be the largest players. For example, although MSTR's market capitalization is only 1/60 the average size of Mag7 stocks, its options open interest sometimes exceeds that of Mag7 stocks. As a result, MSTR has a significant financial advantage over competitors that are unable to effectively exploit financial markets. Over time, this dynamic should result in larger players gaining a sustained mNAV premium relative to smaller players.

We therefore predict that the best outcome for Bitcoin is for the larger Bitcoin DAT to acquire the smaller DAT at a discount. This dynamic will benefit both parties. Shareholders of the acquirer can obtain Bitcoin at a price lower than the market price, thereby increasing the value of each Bitcoin; while shareholders of the acquiree can make up for the discount of Bitcoin by obtaining a higher mNAV. Of course, the definition of “fair dealing” is unclear for both parties. However, the recently completed merger of Strive Inc. and Semler Scientific may provide some reference.

Case Study: Merger of Strive Inc. and Semler Scientific

On September 22, 2025, just as the price of Bitcoin was approaching its 2025 peak, Strive Inc. (ASST) made an attractive merger offer to Semler Scientific (SMLR): 21.05 ASST shares in exchange for 1 SMLR share. The deal was initially valued at US$1.42 billion, a 210% premium to SMLR's enterprise value. Although SMLR had a low price-to-book ratio (0.90), the premium implied by the transaction was equivalent to purchasing Bitcoin at approximately 190% of the market price at the time. However, this lofty valuation may have been overstated, as ASST was trading at a price-to-book ratio of about 4 times at the time. Therefore, as ASST's price-to-book ratio declines due to the dilution caused by the transaction, the premium for the transaction is expected to also decrease.

As of December 30, 2025, the price of Bitcoin has been falling for several months, down 20% since the September trading day. Most DATs perform even worse. ASST's share price plummeted 73% to $0.74 from $2.75 the day before the merger announcement, and the price-to-book ratio also fell to 1.2 times. SMLR's share price fell by 49%, and the price-to-book ratio further deteriorated to 0.77 times. Therefore, the premium for the transaction was only 1.6% above the market price at the time.

In this case, the mNAV of SMLR holders will increase slightly to approximately 0.78 times. At the same time, ASST holders’ Bitcoin holdings will increase from 8.5 BTC per million shares to 10.4 BTC per million shares. However, on January 16, 2026, the deal finally closed, with SMLR’s mNAV at 0.87x. On the other hand, SMLR shareholders’ Bitcoin holdings per share declined, from 332 BTC per million shares to 219 BTC. At the same time, the mNAV of ASST holders also changed, falling from 1.37x to 1.06x the day after the merger. This shows that all parties are willing to make trade-offs in order to achieve a deal.

Potential acquisition targets: BTC Holdings and valuation indicators

Data source: Bitcoin Treasury Net Value as of January 16, 2026. Past performance is not indicative of future performance. This article is not intended to be a recommendation to buy or sell any of the securities mentioned.

Looking ahead, we believe it is highly likely that some ambitious DAT company will acquire another "Bitcoin company." In our view, three companies stand out for acquisition: Bitcoin Group, Empire Digital, and Sequans Communications. All three companies trade at less than 1x mNAV and hold enough Bitcoin to make legal acquisitions profitable. We believe that the one most likely to be acquired is Empire Digital.

Germany-based Bitcoin Group has been one of the most mysterious cryptocurrency companies on our radar. While the company's business appears to be profitable, its shares trade at the deepest discount among its peers. The company reported profits of 1.8 million euros in 2024. Bitcoin Group operates the cryptocurrency trading platform Bitcoin.de and cryptocurrency custody business. The main obstacle is that the company owns and operates a regulated financial services entity in the EU, making it difficult for an acquirer to acquire it quickly or easily. The acquirer needs regulatory approval and requires a lot of patience. In addition, Bitcoin Group also has a major shareholder, Priority AG, which holds more than 25% of the voting rights. However, given its huge share price discount, it remains attractive to sophisticated buyers who can avoid these pitfalls.

Empery Digital is nominally a "powersports/off-road vehicle" company. But in fact, the performance of this business unit is minimal, and it is expected to generate only about $200,000 in revenue in the third quarter of 2025. What makes the company more attractive is its sizeable discount to net asset value, but any potential buyer will have to navigate complex corporate governance and anti-takeover mechanisms.

Shareholders have limited ability to quickly replace the board of directors. Directors can only be removed or replaced at a formally convened shareholders' meeting, and shareholders cannot convene special shareholders' meetings, which greatly limits the rapid turnover of the board of directors. This makes it more difficult to initiate and win a proxy fight when time is of the essence. In addition, Delaware law can restrict certain business combinations for up to three years if the acquirer holds more than 15% of the shares, effectively slowing down the merger process. The board also has the power to issue preferred stock, which can be used to dilute the stake or otherwise block unsolicited takeover bids.

In other words, a patient acquirer like DAT can wait until the next annual shareholder meeting in May 2026. If the mNAV discount persists, market trends ahead of the shareholder meeting could become interesting. Overall, Empery appears to be a better candidate for acquisition than Bitcoin Group, given that it operates in a more familiar jurisdiction, but any merger is more likely to be a gradual process rather than an imminent event.

The primary problem facing Sequans is their structural complexity. The company is headquartered in France but has subsidiaries in multiple jurisdictions, including the UK, US, Singapore, Israel and Finland. Any buyer will inherit a complex system involving multiple countries, which means more links and higher process risks.

Sequans also has an actual operational business. This is a fabless semiconductor company that will be profitable in 2024, with a net profit of approximately $57 million. This is critical because the acquirer cannot treat this as a simple balance sheet acquisition. Operating businesses need to be valued individually and decisions made about whether to be managed long-term or sold in a spin-off, which is likely to result in a more complex structure such as a spin-off or divestiture, or force the acquirer to operate a business with which they may be unfamiliar.

France has added another hurdle when it comes to acquisitions. According to French takeover rules, a mandatory tender offer can be triggered if the shareholding ratio exceeds about 30%. This makes it difficult to quietly build up stakes and complete acquisitions quickly, and makes the entire process slower and more procedural. In addition, boards have tools that can make it more difficult for outside acquirers, such as diluting potential acquirers through stock issuances or favoring friendly parties. Similar to Empire, board and shareholder actions follow a set meeting schedule, which increases time and market risk.

Finally, since this is a semiconductor company, it may be subject to government scrutiny. French authorities can scrutinize and potentially restrict foreign buyers, adding another layer of uncertainty. Sequans is the least attractive of the companies given the many challenges facing potential buyers.