The Only Way Out is Through

Happy Tuesday Bitcoiners,

First off, to those in the US, I hope you had a fantastic Presidents’ Day (who doesn’t love a start to a short week!).

As for Bitcoin, it’s been chopping around $65k - $70k levels, all the while market influencers are debating whether the bottom is finally in (if you read last week’s issue, you’ll know where I stand on this topic).

This week, we're covering:

1. Bitcoin's mining difficulty just had its biggest drop since China's 2021 ban (and the recovery is already underway).

2. Saylor bought another 1,142 BTC while sitting on $5B in unrealized losses.

3. Ray Dalio told 72 million people the world order is broken (and accidentally described why Bitcoin exists in the first place).

1. Is Bitcoin’s Immune System Sick?

On February 7, Bitcoin's mining difficulty dropped 11.16%. The steepest decline since China banned mining in July 2021.

It was the 10th largest negative adjustment in Bitcoin's entire history.

Three forces collided. BTC's crash from $126K to $69K crushed margins. Texas winter storms forced up to 40% of hashrate to move offline.

And hashprice plunged from $70/PH to just $35/PH.

Weak miners proceeded to capitulate. Some shut down. Others pivoted entirely. Bitfarms rebranded to "Keel Infrastructure" and is exiting Bitcoin mining for AI data centers.

The CEO Ben Gagnon was quoted saying "We are no longer a Bitcoin company".

The stock jumped up 16%.

But for those OG Bitcoiners who remember last cycle, this is exactly how Bitcoin is designed to work. Difficulty adjustments are the network's immune system. When miners drop off, difficulty drops, making it cheaper for the miners who stay. The weak get shaken out. The strong get rewarded.

And it's already recovering.

@BitcoinIsaiah flagged "the sharpest V-shape recovery in hashrate I've ever seen." The network cratered to ~900 EH/s and snapped back almost immediately.

So why is this something that’s on my radar? Well, Marathon Digital's cost to mine one BTC hit $67,704 last quarter. With BTC at $66K, some of the biggest miners are operating at a loss.

That's textbook miner capitulation if I ever heard it, and historically, one of the most reliable late-stage bear signals there is.

2. We’ll be Buying the Top Forever

Back in 2021, Saylor told journalist Laura Shin he'd be "buying the top forever." At the time, Bitcoin was $60K and people called him reckless. Four years later, he's still doing precisely that.

Strategy reported a $12.4 billion Q4 loss. One of the largest quarterly losses ever by a U.S. public company.

Stock down 70% from its July 2025 peak.

Saylor's response? He bought 1,142 more Bitcoin for $90 million.

He’s buying the top forever, exactly as he said he’d do.

The numbers reflect this: 714,644 BTC. Average cost basis of $76,056.

Total spent = $54.35 billion.

Current value: ~$47 billion all with an unrealized loss north of $5 billion.

On the earnings call, CEO Phong Le said Bitcoin would need to fall all the way to $8,000 and stay there for up to five years before even threatening their debt.

No major maturities until 2028 with $2.25 billion in cash reserves.

Want another contra indicator? This last week we also saw Bloomberg reporting whales accumulated a staggering 53,000 BTC in one week, the biggest buying spree since November.

And the Coinbase Premium Index continues to go vertical (signaling aggressive U.S. spot demand). Yet again, the larger index funds and institutional money is accumulating BTC while the scared money is leaving.

Pick your side.

3. Ray Dalio Makes Case for Bitcoin

Ray Dalio's essay "It's Official: The World Order Has Broken Down" just hit 72 million views on X. And no that’s not a type on my laptop (see snapshot below).

At the Munich Security Conference, German Chancellor Merz declared the post-1945 world order dead. Macron said Europe must prepare for war. Secretary of State Rubio said the "old world" is gone.

Dalio's framework puts us in "Stage 6 of the Big Cycle": great disorder with no rules.

He describes "capital wars" where nations weaponize money through sanctions, asset freezes, and debt monetization.

His advice? "Sell out of all debt and buy gold".

It gets more interesting though - Dalio told Tucker Carlson: "There will be no privacy. All transactions done with digital currencies will be known. They can take your money".

He basically just described exactly why Bitcoin exists. Then told everyone to buy gold.

Gold can be confiscated (Roosevelt did it in 1933). Gold can't be self-custodied without physical security. Gold can't be transmitted across borders in 10 minutes. Bitcoin solves every problem Dalio identified.

In classic Saylor style, he responded with “If you believe the world order is breaking down, own the asset with no counterparty. Bitcoin?” Seems like Dalio could learn thing or two from Saylor if you ask me…

Dalio's diagnosis of the problem is perfect.

But his prescription of which asset to buy is just one upgrade away.

The Final Word

So the takeaways from the week are the sharpest V-recovery ever (in Bitcoin’s hashprice which typically leads price).

All while the Coinbase premium is going vertical and Saylor is still buying at a frenetic pace.

And Ray Dalio just told 72 million people the world order is broken.

Every one of those signals is pointing in the same direction and that direction end up at Bitcoin.

If this is the moment you decide to act, make sure you're doing it right.

How you buy matters just as much as when.

Chat next week,

Hector