Author| WuBlockchain
This episode of the WuBlockchain Podcast invited Jason Huang, founder of NDV, to discuss the recent Bitcoin decline, the MicroStrategy sell-off incident, macro market risks, and opportunities within the crypto industry. Jason believes the first half of this crypto downturn was mainly driven by the inertial selling pressure of Bitcoin's four-year cycle, while recent declines have started to incorporate factors such as the U.S. stock market correction, liquidity contraction, and MicroStrategy's debt pressure. He judges that the market has not yet truly bottomed, suggesting a bear market bottom often requires a landmark event on the scale of the FTX collapse, triggering widespread despair and a state where no one discusses the market.
Regarding investment strategy, Jason stated that his second fund has achieved returns of around twenty-plus percent this year, participating in commodities trading such as oil, gold, and silver in addition to crypto assets. He remains cautious towards AI stocks, saying that while he is a heavy AI user, he lacks a trading edge; he is also concerned about crowded trades and bubble risks behind the hype around U.S. stocks, semiconductors, and the potential SpaceX IPO. Unlike his short-term market pessimism, he remains optimistic about the long-term value of stablecoins within the crypto industry, considering them one of the clearest and most practically useful innovations in the field, with significant room for further penetration.
Guest opinions do not represent the views of WuBlockchain and do not constitute any investment advice. Please strictly abide by local laws and regulations. Audio transcription and translation were completed by GPT and may contain errors. Please listen to the full podcast:
Xiaoyuzhou:
https://www.xiaoyuzhoufm.com/episode/6a35471543a22a6955866335
MicroStrategy Sell-off Triggers Rush to Exit, BTC Decline Enters Liquidity Squeeze
Cat Brother: In the last podcast episode, you predicted a potentially deep correction in the crypto market around 2026. Bitcoin has been falling continuously recently. Do you think this decline aligns with your earlier judgment? Also, what's your view on the current level? I saw you mentioned around $48,000 on Twitter.
Jason: $48,000 may not be the bottom either. I didn't specify too much at the time because the logic behind each decline is different. It's only recently, especially in the last couple of days, that I feel this decline has truly started to match my expectations from September last year.
The first half was more like concentrated selling driven by Bitcoin's four-year cycle. Many long-term traders exit at cycle nodes, triggering stampedes. Meanwhile, U.S. stocks have held up longer than I expected, but I think their correction is just starting. Against this backdrop, if everyone is holding BTC or IBIT, they often prioritize recovering liquidity.
Additionally, I didn't expect MSTR to last this long. It's only recently that its flywheel mechanism has truly started to malfunction. So I think the magnitude of this decline might be larger than the market expects.
Cat Brother: The recent concentrated drop in Bitcoin was, to some extent, actively triggered by MicroStrategy. It only actually sold 32 Bitcoins, but the market reaction was huge. Some analysts feel this was more about testing market elasticity, and things are still within MicroStrategy's control. What's your take?
Jason: I disagree. Many people imagine founders as overly powerful, able to control everything, but that's not the case. Entrepreneurs facing the future often have to make judgments amidst uncertainty.
MicroStrategy's original model was: borrow debt, issue preferred shares, then use the proceeds from stock issuance to buy Bitcoin. In a rising cycle, this model works because rising Bitcoin prices can cover interest and dividends, and the stock price has a premium, forming a positive feedback loop.
But when Bitcoin falls rapidly, the stock price shifts from a premium to a discount, and it still has to pay real interest and dividends, this mechanism becomes a negative spiral.
I think MicroStrategy has indeed overplayed its hand. It originally had about $2 billion in cash prepared to cover preferred share dividends for the next two years, but then it prepaid a convertible bond due in 2029, consuming roughly $1.2 billion, leaving only four months of the original two-year buffer.
In this situation, it either defaults on its bonds, defaults on its preferred shares, or sells Bitcoin. Selling those 32 Bitcoins has already shown its choice: prioritize creditors first, then shareholders, and Bitcoin holders last.
What the market is truly worried about isn't these 32 Bitcoins, but the total of over 800,000 Bitcoins it holds. The concern is the potential for even larger selling pressure later.
And it's not just them; some large holders have been selling recently because everyone knows MSTR is the biggest potential selling pressure. It's better to exit before it does. So this decline is essentially the market rushing to exit ahead of MSTR.
Next, the key is how MicroStrategy resolves its debt and preferred share dividend issues in the next four months. It must address this; it's just uncertain how. If later someone is willing to take over a large batch of Bitcoin at a discount, preventing it from continuing to sell on the market, then I think that price point is likely close to a stage bottom, as it regains payment capability.
Cat Brother: But since it has decided to sell Bitcoin to pay preferred share interest, why not sell a larger amount at once? Instead, it sold such a small quantity, first sending a signal, which allowed the market to rush ahead of it?
Jason: That's the founder's judgment at a critical moment. He might have thought at the time that selling too much at once would cause more panic; better to sell a small amount first, giving the market a signal while also showing commitment to preferred share investors. It's just that this judgment ultimately backfired.
This kind of thing couldn't be widely discussed; he could only anticipate how the market would interpret it and then make a decision based on what he thought was optimal at the time.
And we can't prove today whether the market reaction would have been better if he had sold more at once. Because market interpretation of information is dynamic; he could only make one choice, not experiment repeatedly.
Fund Returns, Commodity Allocation, and Inflation Trade Outlook
Cat Brother: When we started talking, you mentioned being short recently. The recent Bitcoin decline should have brought decent returns for you guys, right? How is your second fund performing overall now?
Jason: This year's returns certainly can't compare to those speculating on semiconductors or AI, around twenty-plus percent, which is decent. Bitcoin is down over 30% overall this year, and we've made about 20% positive returns, so we've outperformed Bitcoin by roughly 50% to 60%. The first fund also outperformed Bitcoin by about 60%-70%; now it seems we have a chance to surpass that.
Cat Brother: So your strategy for this period is similar to the first, still focused on Bitcoin and crypto-related assets, without touching AI-related products or stocks, right?
Jason: We indeed haven't touched AI. Frankly, I regret it a bit. I'm a heavy AI user, having subscribed to almost all the good paid products available, but ultimately didn't buy related assets, which seems a bit inconsistent.
But we've done other things this year, like oil, gold, silver. For instance, part of yesterday's profit came from shorting silver. I think the trading logic for precious metals and crypto assets is similar: supply-demand driven, event-driven, with high leverage, just at a slower pace, making them easier to analyze.
So this year we've diversified some effort into commodities. Overall, I think commodities are in an interesting phase. Besides precious metals, another big theme this year is inflation. Oil might be the first wave, slowly spreading to other categories later.
Cat Brother: Regarding inflation, I've discussed this with others recently. One view is that the productivity improvements from AI might create a certain deflationary effect. What's your take?
Jason: At least looking at current prices, there's no obvious sign of deflation. I also agree that AI has indeed offset some inflation, but many real-world consumptions won't disappear just because of AI.
For example, rising oil prices directly push up logistics and production costs. Fuel surcharges in air tickets are a direct example, and this pressure will continue spreading to more areas.
Furthermore, I think the "deflation" brought by AI is more evident in employment, meaning it might create unemployment. The reality might not be that everyone lives easier because of AI; it's more like wealthy people earn more through AI-related assets, while ordinary people still face inflation and rising living costs.
The U.S. political system will likely eventually adjust to this issue, such as through redistribution to ease tensions. But if it truly reaches that point, inflation might become even more apparent.
So what the market is trading now is essentially this contradiction: whether inflation comes first, or AI first delivers on its promise of improved efficiency and lower costs. For now, the AI narrative is still stronger, but events like a SpaceX IPO could further drain market liquidity.
So many trends might eventually materialize, but for trading, the hardest part is never judging the direction, but deciding at what time, with what tools, and in what way to get involved.
Cat Brother: Besides the fund, I see you're also involved in a project related to sports trading cards. I listened to your podcast on this topic before but didn't fully understand. Since I don't really watch soccer, basketball, or collect cards, could you briefly explain what this market is and how it works?
Jason: Simply put, sports cards are a very standardized way to "invest in a person" or "invest in an IP." They have a fixed issuance mechanism; they won't be issued infinitely because too many would dilute value. So it's essentially a market with limited supply and long-term operation.
I've always thought that sports and anime IPs are the consumer goods for this generation. Young people who like certain athletes or anime characters when they're young, grow up with purchasing power and are willing to spend on these idols. Sports cards are a category formed under this logic. They have both collectible and investment attributes, tied to the athlete's performance, growth, and personal appeal.
Cat Brother: But from an outsider's perspective, this is somewhat similar to NFTs from before, like IP, fractionalized trading, etc. What's the biggest difference from NFTs?
Jason: It's very different. Many NFT projects back then handled both issuance and trading, made money too quickly, and had no incentive to continue developing the IP. But sports cards are different; behind them are truly long-term operated sports leagues and mature IPs that continuously generate attention, so the market foundation is completely different.
Stablecoins, AI Bubble, and Crypto Bear Market Bottom Assessment
Cat Brother: Why do you think many exchanges are now launching prediction markets? Many also believe prediction markets could become one of the most important directions in the crypto industry in the near future. What's your view?
Jason: Superficially, it's because prediction markets offer a trading model people are willing to participate in; but deeper down, it's because the proliferation of stablecoins and wallets has significantly lowered the barrier to entry for new types of exchanges. Running a centralized exchange involves a whole set of high-cost problems like KYC, user management, fund custody, hacking, and regulation, but platforms like Polymarket keep funds in users' own wallets, with the platform only handling matching. This represents not just prediction markets, but the rise of a new category of exchanges. Following this logic, centralized exchanges will face significant challenges in the future.
Cat Brother: You yourself are a heavy AI user, but neither personally nor through your fund have you bought AI-related stocks. Why?
Jason: On one hand, many products I actually use regularly aren't yet listed; on the other hand, I generally avoid areas where I don't have a trading edge. I understand software better, but what the market is speculating most heavily on is the hardware chain, like optical modules, semiconductors. My research there isn't deep enough, and I haven't specifically filled that gap, so I haven't participated.
Cat Brother: So the recent sharp drop in AI hardware stocks, do you think it's just a normal correction, or is the bubble still in its early stages?
Jason: I wouldn't dare make a judgment due to insufficient research. But after rising so much in a short time, a correction is normal. As for how deep it will fall, it's hard to say. Usually, the faster the rise, the faster the fall, because there must be a lot of speculative money inside.
Cat Brother: You mentioned before that there are several very crowded trades in the market. What's your view now?
Jason: Recently, I've been most focused on semiconductors. This trade has become extremely crowded; I think the staged rise is almost over. Whether it corrects 20% or 30%, hard to say, but such crowded trades often eventually turn from unanimous bullishness into a stampede to exit.
Cat Brother: Between crypto and AI, which has a higher risk-reward ratio now?
Jason: I don't think the crypto market has finished its shakeout; it's hard to truly rise in the short term. Many people like to find optimistic reasons during a decline, but judging from supply-demand dynamics and the level of panic, I don't yet see a real bottom. The timing might be close to a bottom, but in terms of price magnitude, I don't think we're there yet; at least $60,000 may not hold.
Cat Brother: So it's not yet at the FTX stage from back then?
Jason: Not at all. A true bear market bottom often requires a landmark, large-scale event that creates a sentiment of "crypto is finished." It doesn't necessarily have to be a specific exchange collapsing, but at least a player of that scale must encounter trouble. Right now, people are just numb from the decline, not truly despairing. The real bottom usually comes when you and everyone around you are in extreme pain and never want to look at the market again.
Cat Brother: Many people are also pessimistic about the crypto industry itself, feeling it hasn't created anything truly new in all these years.
Jason: I disagree; stablecoins are a very clear achievement. They truly achieved "faster, better," which is the clearest direction for innovation in my understanding. And I'm very optimistic about this sector because its penetration rate is still low. As long as the market space is far from its ceiling, it's not surprising at all if several new players emerge in the future.
Cat Brother: You also mentioned earlier not being bullish on U.S. stocks; is that due to an overall pessimistic macro environment?
Jason: I just think it's unreasonable for something to only go up without ever falling. Market sentiment is a bit overheated now; even ordinary people feel they might as well invest in stocks. This stage is usually quite dangerous. It's not just U.S. stocks; Hong Kong stocks are also crazy under the AI narrative.
A while ago, I also heard an investor say that after seriously reviewing SpaceX's IPO materials, it felt like a company on the verge of bankruptcy. Thinking about it later, it's not entirely unreasonable. Musk tells a big story for SpaceX, even suggesting much future revenue will come from AI. In that case, one might as well directly buy OpenAI. So I think the bubble component here is quite evident.
Moreover, an IPO is often the last major opportunity for founders and teams to extract the most money from the market in a short period, so of course, they'll try to list when the market is hottest. Musk is one of the people who understand capital markets best; he never does business at a loss. So if you're saying there will still be a lot of profit left for ordinary investors in the secondary market post-listing, I don't really buy that.
Cat Brother: People indeed have a bit of path dependency now.
Jason: Right, as if buying and holding will definitely make money. I just think this inertia itself is already very dangerous.
Outlook for the Future: Wait for a Real Panic Sell-off Before Considering Buying the Bottom
Cat Brother: Finally, please give your outlook on Bitcoin and Ethereum's performance over the next year. After all, your prediction last year was quite accurate.
Jason: I am very bearish on Ethereum, even unclear where its bottom might be. As for Bitcoin, on a one-year horizon, I think the final price might be similar to now, but the process will likely involve a significant drop first, followed by a sharp rebound. That is, the timing might be close to a bear market bottom, but in terms of price decline, it might not be there yet; $48,000 might not hold either.
Cat Brother: So you prefer to wait for an event-driven bottom?
Jason: Yes. A real bottom usually comes with a landmark, large-scale event. At that point, you won't need to watch the charts or the news; you'll know something major happened, with your social media feeds flooded with posts and complaints. The FTX implosion was that kind of scale.
It's not yet that time. Although people are experiencing a decline, it's more like being numb from the fall, not true panic. A real bear market bottom often appears after panic is completely released, when no one wants to look at this market anymore. That kind of bottom is clear in hindsight, but at the moment, you typically have no desire to buy at all.
Cat Brother: So when no one wants to buy at all, how do you convince yourself to start buying?
Jason: I still look at penetration rate and consensus diffusion. As long as something has network effects and is only recognized by a small group of core users, far from reaching its penetration ceiling, then its story isn't over. This applies to Bitcoin and also to sports cards.
So I'll first have a cognitive anchor in mind: is this thing still early, is its long-term potential still there. As for exactly how to buy, what drawdown I can accept, that's a matter for the trading level.
When it's truly the most pessimistic time, it's better not to constantly watch the market. I think a very effective method is to step away from the market, like going on a trip. Set your price first, buy when it's reached, and then continue not watching. Because daily chart-watching inevitably affects emotions and interferes with judgment. For long-term holding, staying away from noise is more important.
