January 2026

Bitcoin declined more than 22% peak-to-trough during the month, falling from approximately $97,800 to $76,000. Across perpetual futures markets, leverage that had accumulated throughout the prior quarter was aggressively unwound. At one point, more than $1 billion in positions were liquidated within a single day.

For most market participants, these periods are uncomfortable. For our strategy, they are often the moments that matter most.

01 / Performance

The strategy returned +5.48% net during the reporting period with zero drawdown on the cumulative equity curve. All 21 active trading days closed positive.

What interested me more than the headline number was how it was generated. The common assumption is that strong months come from one or two exceptional trades. January was the opposite. Returns were distributed throughout the month - the repeated accumulation of small gains across many executions. January 15 stood out during a broad dislocation event across mid-cap perpetuals, but outside that session, daily contributions were steady and contained.

That distinction matters because it speaks to the nature of the system itself. We do not depend on outlier days. The strategy compounds through frequency.

All returns are reported net of commissions and funding costs.

02 / Market Structure

The overwhelming majority of crypto trading volume now takes place through perpetual futures contracts rather than spot markets - approximately 77%, a 3.4-to-1 ratio over spot. When that much activity sits in leveraged contracts, liquidation cascades become the dominant driver of short-term price action.

January delivered them in volume.

On January 20, over 182,000 traders had leveraged positions forcibly closed within a 24-hour window. Total liquidations exceeded $1.08 billion, with long positions accounting for nearly all of the damage. Institutional flows compounded the pressure: spot Bitcoin ETFs posted -$1.61 billion in net outflows for the month, while the FOMC held rates at 3.5%–3.75% at its January 27–28 meeting - neither providing catalyst nor support, leaving leveraged positioning as the dominant force driving price.

This distinction is important to understand.

When markets move because new information arrives, price discovery is complex and difficult to model. When markets move because participants are forced to act - because their leverage was too high, their margin too thin, or their stop too close - the resulting behavior becomes more mechanical. The dislocations are short-lived, violent, and structurally predictable in their aftermath.

Those are the conditions our system is designed to engage with.

Bitcoin's 10.57% close-to-close decline was not a meaningful input to the strategy's P&L. We are indifferent to market direction. What the system responds to is the quality, frequency, and structure of dislocations - and January produced them at a rate consistent with the strongest operating months in our history.

03 / Risk & Execution

Maximum drawdown was zero throughout the period. Leverage remained conservative.

I want to be clear about what drove the elevated performance: it was not increased risk-taking. Risk controls were unchanged. The system simply encountered more opportunities that met its existing thresholds. When the environment is rich, the system deploys more. When conditions deteriorate, activity contracts.

The environment determines activity. Not the other way around.

04 / Looking Ahead

One statistic that will naturally attract attention is the absence of drawdown. While notable, I would caution against placing too much importance on any single month's risk profile. Drawdowns are a normal part of systematic trading. The objective is not to eliminate them entirely - it is to ensure they remain controlled relative to the opportunity being pursued.

January happened to be one of those months where conditions aligned exceptionally well with the strategy's design.

They will not all look like this.

What gives me confidence is not the monthly return itself. It is that the behavior of the system was entirely consistent with how it was designed to operate. The opportunities we expected to see appeared. The system responded as intended. Risk remained within limits.

As we move into February, the question is not whether Bitcoin rises or falls. The question is whether the structural features that create recurring dislocations within perpetual futures markets remain intact - the leverage, the funding mechanics, the liquidation architecture, the fragmented liquidity.

Our view is that they do.

The system continues to operate within all defined parameters.