Bitcoin mining stock prices were in free fall with the wider market on Thursday, with many marquee names down double digits as the market reckons with the Federal Reserve’s decisions to keep rates unchanged on Wednesday. In the hours after market open, bitcoin mining stocks that have been expanding into AI and pure-play bitcoin miners alike fell precipitously. Among the hardest hit were Cipher Mining (-9%), CleanSpark (-7.6%), TeraWulf (-7.3%), HIVE (-7.1%), Cango (-6.4%), IREN (-6.3%), Riot (-6.6%), and ...

Core Insights - Michael Kramer is the founder of Mott Capital, focusing on macro themes and long-term thematic growth strategies in investment [1] - The investing group led by Michael Kramer, Reading the Markets, provides daily commentary, macro trend education, and community engagement for its members [1] Group 1 - Mott Capital specializes in identifying entry and exit points for investments through analysis of market technicals, fundamentals, and options [1] - The subscription service for Reading the Markets is priced competitively compared to similar technical coaching services, offering unprecedented access to expert insights [1] Group 2 - Michael Kramer has 30 years of experience in the investment field, including roles as a buy-side trader, analyst, and portfolio manager [1] - The group offers regular Zoom sessions for discussions on current investment ideas and member questions, enhancing the educational aspect of the service [1]

Core Insights - Bitcoin is experiencing a significant shift as the amount held on centralized exchanges declines to levels not seen in several years, indicating a maturation in how the asset is held and traded [1][2]. Exchange Reserves - Bitcoin balances on centralized exchanges have dropped to an estimated range of 2.4 million to 2.8 million BTC as of early January 2026, down from over 3 million BTC in 2020 [2]. - The removal of hundreds of thousands of Bitcoin from exchanges over the past years represents a persistent supply-side shift in Bitcoin's trading history [3]. Market Dynamics - The decline in exchange-held Bitcoin is altering market liquidity dynamics, with fewer coins available on exchanges leading to more pronounced price reactions to buying or selling pressure [5][8]. - Institutional investors and high net worth individuals are increasingly comfortable holding Bitcoin outside of exchanges, reflecting growing confidence in custody infrastructure [7][10]. Trading Environment - The tightening liquidity backdrop requires larger participants to approach execution cautiously, often turning to over-the-counter desks for sizable transactions [9]. - Institutional participation is reshaping Bitcoin custody practices, with significant holdings now managed through qualified custodians rather than exchange wallets [10][11]. Price Discovery Mechanisms - Bitcoin's price discovery process is becoming more distributed, with exchange balances representing a smaller portion of circulating supply, leading to a mix of exchange trading activity and off-exchange transactions [12][13]. - The evolution mirrors traditional financial markets, where a substantial share of trading volume occurs outside centralized exchanges [13]. Long-Term Holding Trends - A significant portion of Bitcoin leaving exchanges is flowing into long-term holder wallets, with addresses that have not moved Bitcoin for over a year controlling an estimated 65% to 70% of the circulating supply [14]. - Elevated long-term holding levels are historically associated with reduced selling pressure, which can lead to accelerated price movements when demand increases [15]. Regulatory Environment - Regulatory developments are influencing how market participants interact with cryptocurrency exchanges, encouraging a shift towards self-custody or institutional-grade storage [16]. - Exchanges are enhancing security features and custody services in response to these regulatory changes [17]. Market Adaptation - Professional traders and liquidity providers are adjusting their strategies to reflect evolving market conditions, with algorithmic models factoring in thinner order books [18]. - The changing structure is supporting growth among specialized service providers, such as custody platforms and OTC desks, as participants seek efficient transaction methods outside traditional exchanges [19]. Future Outlook - The downward trend in Bitcoin exchange reserves is expected to continue, supported by institutional participation and expanding custody options, indicating a maturing market structure [20]. - This shift creates new considerations for traders in a lower-liquidity environment, while long-term holders may benefit from reduced immediate selling pressure [20][21].

Group 1 - Ark Investments purchased 62,166 shares of Coinbase (COIN) for an investment value of $16.5 million, marking the largest purchase since August 1 [1][2] - The purchase occurred during a 30% drawdown in COIN's stock price over the past month, indicating a strategic entry point for the firm [1][3] - COIN closed at $264.97, up 4.27%, as part of a broader rebound in the cryptocurrency market [3] Group 2 - Cathie Wood anticipates an end to liquidity tightening, which has impacted the AI and crypto sectors, potentially signaling a favorable environment for these markets [5] - Ark Invest's report suggests that with liquidity returning and quantitative tightening ending on December 1, market conditions may reverse recent drawdowns [6] - The firm expects an additional $300 billion to return to the markets in the coming weeks as the Treasury General Account normalizes [7]

Core Insights - The current behavior in global financial markets is characterized as a classic late-cycle phenomenon, rather than an indication of an imminent recession [1] - Bitcoin is currently trading around $91,750, showing attempts at recovery after a dip below $90,000, influenced by liquidity conditions and ETF outflows [2] - The recent asset corrections are attributed to tightening liquidity, changing policy expectations, and declining risk appetite, following excessive gains [3] Market Dynamics - The likelihood of a quarter-point rate cut has decreased significantly from over 60% to 32.8% within a week, indicating a shift in investor sentiment [4] - Duration-sensitive assets like Bitcoin have been adversely affected, while equities are showing resilience due to strong corporate earnings, particularly in AI sectors [5] - The current market environment is described as late-mid to early-late stage, with rising vulnerabilities and sensitivity to macroeconomic shocks, but without clear recession indicators [6] Bitcoin Outlook - Analysts suggest that Bitcoin is in a bottoming process, but a rapid recovery is not expected; instead, a weak rebound followed by a range-bound bottom formation is more likely [7] - The stabilization of macro liquidity is essential for a true trend reversal in Bitcoin's price trajectory [7]

Core Viewpoint - The cost of U.S. overnight funding in the repo market remains high and is expected to stay elevated into year-end, despite recent easing measures by the Federal Reserve, contributing to stress in fragile financial markets [1] Group 1 - The repo market is experiencing stubbornly high overnight funding costs [1] - Federal Reserve easing measures have not significantly impacted repo market rates [1] - Financial markets are under additional stress due to elevated funding costs [1]

Market Overview - Markets are experiencing a pullback, with the Nasdaq down by 2% and the S&P 500 down by 1.2% [1] - The Federal Reserve's hawkish stance is contributing to market volatility, as Chairman Jerome Powell indicated that rate cuts may not occur in December [5] Cryptocurrency Market - Cryptocurrency prices are declining, with Bitcoin down by 3% and threatening to fall below $100,000, while other cryptocurrencies like Ether, XRP, Solana, and Dogecoin are down by 2%-6% [2] - Crypto-related stocks are facing significant losses, with Robinhood down by 8.5% despite a strong earnings report, and Coinbase and Gemini down by 5.6% and 3% respectively [3] Digital Asset Sector - Capital is moving away from digital asset treasury sectors, highlighted by a 5.9% decline in MicroStrategy (MSTR), which is now down 6.8% year-over-year and 56% from its peak of $543 [4] - Bitcoin mining stocks, which had previously benefited from a pivot to AI infrastructure, are also seeing declines, with companies like Hut 8, IREN, and Cipher Mining down more than 8% [4] Employment and Economic Indicators - The Challenger job layoff report indicates one of the worst results in over two decades, signaling underlying economic weakness [7] - CarMax's CEO unexpectedly stepped down, leading to a 20% drop in the company's shares, reflecting concerns about economic pressures [7] Government Shutdown Impact - The ongoing federal government shutdown is expected to have a prolonged impact, resulting in billions of dollars not flowing through the economy and markets [8]