DAiM Issue 57
Welcome to DAiM's Newsletter. Where wealth is redefined in crypto. We have our clients to thank for being an award winning asset manager. Please enjoy our thoughts below.
“You own Bitcoin because you’re frightened of your physical security. You own it because you’re frightened of your financial security. The long-term fundamental reason you own it is because of the debasement of financial assets, because of deficits.”
- Larry Fink
Bitcoin Spot ETF Flows: Noise vs Signal
AI Agents Are Choosing Bitcoin
What’s Next
Bitcoin, Bonds, and a Well Diversified Portfolio
Noteworthy
Bitcoin Spot ETF Flows: Noise vs Signal - Bitcoin ETF flows continue to confuse even seasoned market observers. Daily volumes can swing by hundreds of millions of dollars, often flipping abruptly from strong inflows to outflows. This naturally raises the question of what is actually driving these moves and why Bitcoin’s price does not always respond in kind. While many point to institutional activity, ETF flows reflect more than just directional bets. They also capture rebalancing, arbitrage, and short-term positioning, meaning flows often follow price rather than lead it over shorter timeframes.
Stepping back, the broader trend is more telling. Bitcoin ETFs have brought in roughly $2.5 billion month to date and are within reach of fully reversing their year to date outflows. Notably, iShares Bitcoin Trust (IBIT) has already moved back into positive territory and ranks among the top 2 percent of all ETFs by inflows this year. This comes despite Bitcoin experiencing a roughly 40 percent drawdown over the past six months alongside persistent negative media coverage.
Historically, that kind of price decline tends to trigger significant investor exits. When gold fell by a similar magnitude about a decade ago, roughly one third of investors exited their positions. That level of capitulation is considered normal behavior in traditional markets. What stands out in Bitcoin’s case is the relative absence of sustained outflows despite comparable pressure.
This resilience suggests that the investor base accessing Bitcoin through ETFs may be structurally different from prior cycles. Rather than reacting quickly to volatility, capital appears more patient and conviction driven. While daily flow data remains noisy, the cumulative trend points toward growing stability and longer holding periods.
If this pattern continues, ETF flows may become less useful as a short term trading signal and more important as a measure of underlying adoption. Persistent inflows, even at moderate levels, represent steady demand against a constrained supply backdrop. Over time, that dynamic could carry more weight than any single day’s flow data and signal a deeper shift in how Bitcoin is held within portfolios.
A new study from the Bitcoin Policy Institute adds an important data point to a theme we highlighted last month: the rise of machine-native money. Researchers tested 36 frontier AI models across thousands of open-ended monetary scenarios to understand how autonomous agents would choose to transact. The results were striking. Bitcoin ranked as the top overall choice, stablecoins dominated payments, and traditional fiat was almost entirely rejected.
What emerged was a clear two-tier system. AI models consistently selected Bitcoin as a store of value while favoring stablecoins for transactions. In long-term savings scenarios, Bitcoin saw overwhelming consensus, while stablecoins led in everyday payments. Without being prompted, some models even proposed pricing goods in compute or energy units, reinforcing the idea that economic activity in an AI-driven world may evolve beyond traditional currency frameworks.
This directly reinforces what we outlined in last month’s issue. The infrastructure for “robot money” is already being built. Companies like Coinbase are enabling AI systems to connect directly to wallets and send payments, while Bitcoin’s Lightning Network allows agents to pay for APIs and data in real time using tiny fractions of a cent. Instead of subscriptions or billing cycles, machines can transact continuously, paying only for what they use.The key constraint has never been demand, it has been the limitations of traditional financial rails. Banking systems require human identity, impose minimum transaction sizes, and struggle with speed across borders. These frictions make them incompatible with autonomous agents that operate 24/7 and transact at high frequency. Crypto removes those constraints by enabling instant, low-cost, and permissionless value transfer.
What the study makes clear is that this is not just a human narrative being imposed on technology. When AI systems are given the freedom to choose, they independently converge on the same conclusion. Bitcoin functions as savings, stablecoins function as money in motion, and both operate natively on open networks. The question we posed last month is starting to answer itself. It is not whether humans will adopt crypto for everyday payments, but whether machines already are.
What’s Next - Every crypto cycle evolves in phases. Capital typically flows into bitcoin first. Then it moves into large cap platforms like Ethereum and Solana. Later in the cycle, capital rotates into more specialized sectors where new narratives and new growth opportunities emerge. Gone are the days when you could anticipate this rotation and blindly invest in altcoins. The market has matured. Capital is more selective, and only a small number of projects are capturing meaningful attention and flows. Because of that, the focus now is not broad exposure. It is targeted exposure. There are a few specific developments we are monitoring closely as we look for tactical allocations that can add diversification and alpha to a crypto portfolio.
This does not change our core strategy. Bitcoin remains the foundation of the portfolio and the primary long term holding. We are not interested in selling bitcoin to chase new trends. Instead, we look for opportunities where other digital assets may outperform bitcoin for periods of time, and then we rotate those gains back into bitcoin. The goal is always to stack sats and increase bitcoin holdings over time. What changes over a cycle is which sectors offer the highest growth potential.
Ethereum and Solana have been two of the most important platforms. Both ecosystems have matured significantly and now represent large, established parts of the digital asset market. As assets grow and mature, their upside potential typically becomes more moderate compared to earlier stage opportunities. That is a normal part of market cycles. Because of this, we are beginning to look toward emerging sectors that could drive the next phase of growth in the crypto market.
One area we are watching closely is decentralized finance, specifically the next generation of on chain trading, derivatives, and financial infrastructure. The first wave of DeFi focused on lending and simple exchanges. The next wave is focused on building full financial systems onchain, including derivatives, leverage, and more advanced trading platforms. This sector has historically produced strong performers in the later stages of bull markets. Projects to consider HYPE, JUP, DYDX.
Another area we are paying attention to is privacy. Privacy was one of the original use cases for cryptocurrency, but the sector has been quiet for several years due to regulatory pressure and exchange delistings. However, the need for financial privacy has not gone away, and the technology continues to improve. If the regulatory environment becomes clearer or adoption increases, privacy focused projects could see renewed interest later in the cycle. Projects to consider ZEC, XMR, SCRT.
Finally, we are monitoring real world asset tokenization and AI. As institutions and Wall Street continue moving into digital assets, the infrastructure that supports stablecoins, tokenized assets, and on-chain financial products could see significant growth. And we still think AI will have some major integration with crypto. Crypto moves fast, and in many cases, projects can frontrun their actual market fit. We saw this play out with early AI related tokens, including Artificial Super Intelligence (FET), where excitement and capital moved in ahead of real adoption. In hindsight, 2025 was more of a headfake for crypto AI than a true breakout. But AI will need a decentralized brain as the automation of everything movement takes place. The use case lends itself too much to crypto to not work in the long run. Projects to consider LINK, ONDO, WLD, TAO.
The crypto market is ultimately driven by capital rotation. Money does not flow into every asset at the same time. It moves from bitcoin to large caps, then from large caps into smaller sectors and new narratives. Understanding where we are in the cycle and where capital may flow next is one of the most important parts of portfolio management in digital assets.
Our strategy remains simple. Hold bitcoin as the core long term position. Look for select opportunities where other digital assets may outperform. Rotate those gains back into bitcoin over time. The goal is not to accumulate more dollars. The goal is to accumulate more bitcoin.
Bitcoin, Bonds, and a Well Diversified Portfolio - When most traditional investors first hear about bitcoin, they tend to view it as a single risky asset that either goes up a lot or crashes a lot. Because of that, they often assume bitcoin cannot fit into a conservative or well diversified portfolio. We strongly disagree.
The better way to think about bitcoin is not as a replacement for a portfolio, but as a new asset class that can sit alongside stocks and bonds. For decades, traditional portfolios have been built using some mix of equities for growth and bonds for stability and income. That framework still makes sense, but bitcoin introduces a new variable that did not exist before. Instead of a portfolio being only stocks and bonds, the modern portfolio is increasingly becoming stocks, bonds, and bitcoin.
Bonds still play an important role in many portfolios. They can reduce volatility, provide income, and help stabilize a portfolio during equity market downturns. For investors who are risk averse or approaching retirement, bonds can still serve a purpose as the more stable portion of the portfolio.
Bitcoin serves a very different role. It is not designed to generate income or provide short term stability. Bitcoin’s role is long term appreciation and protection against currency debasement and monetary expansion. In many ways, bonds are designed to preserve purchasing power in the short term, while bitcoin is designed to preserve purchasing power over the long term. When viewed together, they are not necessarily competitors. They can actually complement each other inside a diversified portfolio.
There is also an interesting trend happening among self made business owners and entrepreneurs. Many of these individuals did not build their wealth by following conventional advice or relying on large institutions. They built wealth by taking calculated risks, maintaining control over their decisions, and betting on themselves. That mindset often carries over into how they think about investing.
For these investors, the appeal of bitcoin is not only performance. It is independence. Bitcoin operates on a permissionless network that is not controlled by a central bank, government, or single company. It cannot be diluted by increasing supply, and it cannot be easily frozen or restricted in the same way traditional financial assets can. For people who built their careers around self reliance and control over their own outcomes, this is not just an investment thesis. It is a philosophical alignment.
This does not mean bonds have no role, and it does not mean bitcoin is without risk. Bitcoin is volatile, the regulatory environment continues to evolve, and custody and security must be handled carefully. All of these are important considerations when building a portfolio. But for advisors and investors who are trying to understand why more high net worth individuals and business owners are allocating to bitcoin, the answer is often not just about returns. It is about diversification, independence, and long term purchasing power.
The conversation should not be bonds or bitcoin. The conversation should be how bitcoin fits into a portfolio that already includes stocks and bonds. The most important shift is moving from thinking about bitcoin as a speculative trade to thinking about bitcoin as a long term allocation within a well diversified portfolio.
More on crypto wealth management in our latest episode of Strategically held.
Noteworthy - Want to know what it’s really like to be a trial attorney and Bitcoin investor? On a recent episode of Strategically Held Bryan sat down with Ryan Wynne to see who “Can’t handle the truth!”
How DAiM benefits clientsWealth Management: We are a licensed Registered Investment Advisor (RIA). This requires us to act as a fiduciary looking out for our clients diverse financial needs.
Model Portfolio: Our meticulously managed portfolio has outperformed the simple strategy of buying and holding bitcoin alone by more than 310% since inception on 5/31/2018.
Tailored Solutions for Various Investors:
Crypto focused: HNWI looking for management of large crypto holdings.
Comprehensive Wealth Management: Blending traditional stocks and bonds with crypto in long term financial planning, portfolios, estate creation, and tax planning.
Intergenerational Wealth Planning: Large families aiming to create and manage intergenerational wealth, including gifting in bitcoin across multiple generations.
Simplified Management: Investors struggling with the complexity of juggling multiple wallets, decentralized exchanges, and manual tracking.
Bitcoin Options Trading: Investors looking to manage risk or generate additional yield through advanced strategies like bitcoin covered calls and zero-cost collars.
Bitcoin Lending: Investors seeking opportunities to lend their bitcoin and earn interest while retaining ownership of their assets.
Estate and Tax: Investors needing to protect their assets and understand taxes.
Enhanced Support and Communication: We understand the frustrations of navigating communication with crypto exchanges. At DAiM, we provide easy access to expert guidance, ensuring seamless communication for our clients.
Curious to Learn More About Investing with DAiM? Contact us at hq@daim.io
