MarketsBitcoinAltcoins
|4 min ReadDovey Wan: The $120k Illusion and The Paper Bitcoin Era
Jax Morales
Senior Analyst
Published
Jan 16, 2026
The "Institutional Supercycle" is here, and it’s surprisingly hollow. Bitcoin crossed $100k and tapped $120k in this 2025-2026 run, fulfilling the decade-long wish list: Circle IPO, US Presidential support, and sovereign adoption.
Yet, volatility has collapsed. Dovey Wan (Primitive Ventures) argues the "high beta" thrill is gone because the buyers aren't traders—they are corporate treasurers executing accounting arbitrage. The market has shifted from "Crypto Native" value discovery to "TradFi" balance sheet management.
1. The Great Divide: Onshore Buy vs. Offshore Sell
The market structure reveals a massive divergence.
The Buyer (Onshore): The Coinbase Premium (Image 1) remained positive during all three peaks (A, B, C), proving that US spot buyers are driving the price.
The Seller (Offshore): Binance Balance (Image 2) surged during rallies, indicating offshore whales and retailers are dumping into the US bid.
2. The "Smart Money" Illusion (DATs & ETFs)
The narrative that "institutions are holding forever" is false.
DAT Arbitrage: Companies like MicroStrategy buy to maintain stock premiums. They issue 0% convertible bonds to buy BTC. It's mechanical arbitrage, not conviction.
ETF Reality: Look at the holder structure below. "Institutions" (13F filers) hold less than 25%. The bulk is Advisors (passive allocators) and Hedge Funds (who trade actively and reduce exposure).
3. Retail is Gone (The Liquidity Gap)
Despite ATHs, retail has abandoned crypto for AI Stocks (Nvidia) and Gambling (0DTE Options / Polymarket).
Traffic Collapse: Visits to Binance and Coinbase are down significantly compared to 2021.
Korean Exodus: South Korean retail volume on Upbit crashed 80%, while their net buying of US Tech stocks hit $31 Billion.
4. The 2026 Outlook: Financialization
We have entered the era of "Paper Bitcoin." "Code is Law" has been replaced by "Code is Collateral."
New Infrastructure: In 2026, DTCC and SFT Clearing will fully integrate Bitcoin, making it standard Wall Street collateral.
The Strategy Quadrant: Dovey’s framework for the next few years relies on Macro Liquidity (Y-axis) vs DAT/ETF Premiums (X-axis).
Current State:* Moving left from "High FOMO" to a "Cycle Reset."
The Play:* Watch for the Tightening + Discount quadrant for the true generational entry.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.