3% Inflation is The Norm and The DAT Bloodbath About To Begin?

Federal Reserve Chairman’s Jerome Powell term at The Fed in the last 4 5 years has not been without it’s drama to say the least.

First you had the mockery with transitory inflation that was less transitory than they thought and meant that we had a pretty bad inflation hangover in 2021 and into 2022.

Then in 2022 the Fed went on a rate hike cycle that was the fastest the country had experienced in 40 years which was also one of the catalysts for the last Bitcoin bear cycle.

This is the equivalent from going on the See Food diet (where you see food and you eat it) to going fasted vegan all of the sudden and that got all sorts of people upset in 2025 the biggest noise came from the Executive Branch.

Now the Department of Justice has opened an investigation into Powell about *checks notes* cost overrun for the headquarters renovation?

Which really seems more like a run around way for the Trump administration to punish him for refusing to cut rates so far in 2025 and 2026.

Also the administration is desperate to get that number down because there is so much public debt that has to be rolled and if they lower interest rates that means that the payments that have to be made will be less for the country to pay over the next few years. Also many, many other countries will have to do this in 2026 as well.

The whole thing is a flea circus.

But here’s what matters: the Fed is holding rates near what they call “neutral” which is not such a bad thing, if there’s one thing that the market hates it’s uncertainty.

Third quarter GDP hit 4.4%. Unemployment is at 4.4%. Inflation is still sticky at 2.8% but not rising, nor falling.

Although if you want to see why Bitcoin is such a thing a 2.8% yearly inflation rate which means over 30 years 84% of your wealth would have been inflated away.

And Bitcoin doesn’t need rate cuts to win. It needs clarity. It needs the macro backdrop to stop changing every five minutes. It needs institutions to stop wondering if the next shoe is about to drop.

A rate hold gives them that.

Markets hate uncertainty. They can work with “steady” and can even price in stability. What kills them is whiplash... constant policy shifts, emergency interventions, chairs who might get replaced mid-crisis.

Tomorrow’s likely decision removes one variable from the equation. Rates stay put.

If inflation continues to go up Bitcoin will likely join in price appreciation, if the economy remains stagnant Bitcoin seems to be holding pretty well with price action but don’t forget that 2.8% yearly inflation.

Before the goal was 2% yearly inflation and now the number is almost 3%.

It seems trivial at first but pulled out over a long time horizon 3% inflation rates will erase 90% of someone’s purchasing power by the time they reach retirement.

This is why Bitcoin exists and if inflation persists it’s one of the biggest reasons why Bitcoin will be inevitable.

Here’s something else that may be inevitable as well…

Pantera Capital just dropped a prediction that should make you pay attention.

They’re calling it “brutal pruning.”

Right now, there are nearly 200 companies holding Bitcoin on their balance sheets. Corporate treasuries collectively own about 1.13 million BTC... roughly 5.4% of all Bitcoin that will ever exist.

But here’s a problem and a prediction: most of those companies won’t survive 2026.

Pantera’s research shows the pattern clearly.

Strategy (formerly MicroStrategy) owns 709,715 BTC. The second-largest holder owns 52,850 BTC. That’s an 11x difference. And the numbers only get smaller from there.

Why? Because raising capital in 2026 is harder than it was in 2025. Debt is expensive. Equity offerings only work if your stock trades at a premium to your holdings and if you’re trading below net asset value, you’re stuck.

ETHZilla just sold $74.5 million worth of Ethereum to repay debt. They couldn’t raise new capital when then they couldn’t sustain the model and had to sell.

That’s a possible canary in the coal mine.

Pantera’s prediction: “In each major asset class, only one or two players will dominate. Everyone else gets acquired or left behind.”

Now here’s what Wall Street won’t tell you about this.

This isn’t bearish. It’s the opposite.

When weak hands consolidate into strong hands, supply gets locked up permanently.

Most of the DAT’s (Digital Asset Treasury) companies that were out there are mostly performing as glorified bank vaults and existed to make some cash but the reality is that for most there’s very few reasons to give them your Bitcoin because they were just holding it for… no reason at all.

They didn’t make the capital work, they were merely fee collectors and those are the companies that will be cut first.

The pruning Pantera describes is exactly what turns Bitcoin from a speculative asset into a balance sheet asset. It’s what happens when the amateurs exit and the professionals take over.

It’s painful, messy and how markets mature.

And mature markets with concentrated, long-term holders? Those are the ones that go parabolic when demand shows up and supply is wildly thin.

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Bitcoin hit a 2026 low Sunday. $86,000 briefly and is now hovering around $87,800.

$224 million in liquidations. $68 million on Bitcoin futures alone.

The usual weekend thin-liquidity, insane world news bloodbath.

But here’s what’s actually driving the selling.

Japan’s Prime Minister warned against “abnormal” currency moves after the yen spiked Friday. Markets are on edge watching for intervention. U.S. Senate Democrats are threatening to block a spending package unless Homeland Security funding gets cut. Polymarket traders are pricing in a 76% chance of a government shutdown by month-end.

And oh yeah... the Fed meets tomorrow.

Also 4 of the 7 Mag 7 - Microsoft, Meta, Tesla, and Apple all report earnings this week.

It’s a macro hurricane.

In these circumstances Bitcoin is trading like a risk off asset where it provides quick liquidity to a market that needs it.

Because of it’s 24/7 nature people, funds and companies can sell off their Bitcoin to move in to cash to handle the next move like for instance when Treasury yields spike, when currencies whipsaw, when Washington threatens to shut down, etc.

That’s not what Bitcoin maxis want to hear. But it’s reality in January 2026.

Here’s the contrarian take though.

Bitcoin held $86,000. That’s the low from early January. It’s been tested twice now. Support is forming exactly where institutions were buying three weeks ago.

The macro setup hasn’t changed. Rate cuts are still coming later this year. Government debt is still exploding. Institutional treasuries are still buying every dip. ETFs still hold 1.3 million BTC worth $117 billion... double what they held at launch.

Short-term price action and long-term trajectory are two ships passing in the night.

Right now, Bitcoin is digesting a wild year-end selloff, navigating political chaos in D.C., and dealing with global currency volatility that has nothing to do with Bitcoin fundamentals.

But if you zoom out every dip below $90K gets bought and very consolidation phase ends with a breakout. And every time Bitcoin holds support during macro chaos, the institutional conviction grows stronger.

When the chaos settles... and while this is a somewhat chaotic time we have to remember that Bitcoin has survived worse and that it exists parallel to the regular system not unaffected by it but influenced by it.

Tomorrow the Fed confirms what markets already know: rates are staying put. That removes one massive uncertainty from the equation. It tells institutions the macro backdrop is stable enough to make long-term allocation decisions.

Pantera’s “brutal pruning” prediction isn’t a warning. It’s confirmation that Bitcoin is transitioning from speculation to infrastructure.

Weak treasuries with bad business plans will fail. Strong ones will consolidate and earn more and supply will lock up permanently in the hands of companies that raised billions specifically to hold.

And Bitcoin’s weekend drop below $88K? That’s noise. Short-term positioning adjustments against a backdrop of geopolitical tension and political drama in Washington.

None of it changes the core thesis.

21 million coins. Institutional treasuries locking up 5.4% of supply. ETFs doubling their holdings in two years. Governments printing money faster than they can count it.

Stay focused. The game is still on.

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