Author | Wu Shuo Blockchain
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This episode of Wu Shuo Non-Crypto Podcast invited Didier Zheng, a frontier technology investor, to discuss the recent Bitcoin decline, changes in MicroStrategy's financial strategy, the AI-driven rise of U.S. stocks, the integration of crypto exchanges with U.S. stocks, and the macro outlook.
Didier believes that the core reason for Bitcoin's recent drop is not purely macroeconomic factors or ETF redemptions, but rather that the market has begun to reprice the expectation that MicroStrategy may continue to sell small amounts of Bitcoin to pay preferred stock dividends under its "Bitcoins-per-Share Neutrality" principle. Meanwhile, AI is reshaping the labor structure, with tokens being viewed as a new factor of production, driving the continued rise of the AI industry chain in U.S. stocks. The crypto industry may gradually shift from native altcoin speculation to real-world asset tokenization, on-chain machine economies, and a more mature industrialization stage.
Guest comments do not represent the views of Wu Shuo, do not constitute any investment advice, and strict compliance with local laws and regulations is required. Audio transcription and translation were completed by GPT and may contain errors. Please listen to the full podcast:
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https://www.xiaoyuzhoufm.com/episode/6a337dbb43a22a695585c365
MicroStrategy's Bitcoin Selling Experiment: The Expectation of Sustained Selling Pressure vs. Market Absorption
Maodi: Bitcoin has been falling sharply recently, and there are many explanations in the market. Some say it's because MicroStrategy is selling Bitcoin, some blame ETF redemptions, while others attribute it to macro changes or leveraged liquidations. Which factor do you think is the most critical?
didier: I think the core is still MicroStrategy. But what's truly suppressing the market is not the one-time sale itself, but the market beginning to expect it to continuously sell Bitcoin.
At its May earnings call, MicroStrategy proposed maintaining Bitcoins-per-Share neutrality. With the continuous issuance of preferred stock and debt instruments like STRC, STRZ, STRD, STRF, Bitcoin is no longer just an asset for common shareholders; it must first cover the interests of creditors and preferred shareholders. This makes the cost of maintaining BPS neutrality much higher.
Previously, the market believed it primarily paid preferred dividends by selling stock, putting little pressure on Bitcoin. But now, the barrier to raising funds by issuing new stock has increased, shifting pressure towards Bitcoin. As long as MMV remains below the neutrality threshold, it becomes more likely to cover cash flow through small, continuous Bitcoin sales. Especially if the dividend payment frequency increases further, the market naturally expects it's not a one-off sale but possibly recurring sales at regular intervals.
So the key to this round of decline is not "how much was sold," but "whether it will keep selling in the future." Under this logic, ETF selling looks more like a result, not a cause. Because once the market judges that MicroStrategy will continue selling, related funds will exit early.
Maodi: You mentioned earlier that Michael Saylor seems to be conducting a financial experiment. What's the purpose of this experiment?
didier: Essentially, he is testing the market's capacity to absorb sustained, small-scale Bitcoin sales.
From a financial perspective, when MMV premium is not high, small Bitcoin sales are less damaging to BPS than selling stock—it's a first-order optimal solution. The problem is, after the large-scale issuance of STRC in March, interest and dividend payments on preferred stock and perpetual instruments have increased significantly, making cash flow management a necessary issue. So the key is no longer whether to manage cash flow, but how to manage it.
If the market can absorb the impact of these sustained, small-scale sales, this system can continue. But if this approach conversely depresses the stock price, lowers MMV, worsens decoupling, and further reinforces the expectation of "continuous selling," then it may be forced into a soft pivot. For example, relying more on stock sales again, or using a mix of stock and Bitcoin sales. While this sacrifices some BPS, it reduces the impact on Bitcoin and stock prices—a second-order optimal solution.
So right now, it's essentially a game between Michael Saylor and the market. He's watching to see at what price sufficient buying support emerges, while the market is waiting for a lower, more certain price to step in.
Maodi: Could this evolve into a "death spiral" for both MicroStrategy and Bitcoin?
didier: I think, by itself, this incident is unlikely to reach that point. To truly reach that stage, it usually requires new macro headwinds or a larger systemic shock on top of this.
As long as a soft pivot emerges later—no longer rigidly selling Bitcoin—buy-the-dip funds will likely return. The question isn't whether there's support, but at what price it appears. It could be at $62k, or lower; the market is currently waiting for that level.
So my judgment remains cautiously optimistic: This decline is more due to structural pressure from changes in MicroStrategy's own financial structure, rather than purely driven by macro liquidity tightening. Barring new major negative catalysts, the situation can likely still be turned around, and it's not easy to directly evolve into a true "death spiral."
Tokens Are Seen as the New-Age Labor Force
Maodi: Although the crypto industry is relatively sluggish now, AI is booming, especially U.S. stocks related to optical modules, semiconductors, and data centers are rising sharply. What do you think is the core driver behind this?
didier: The core is actually quite simple: tokens are essentially becoming the new-age labor force.
In the past, a company's core production factor was people, whether it was physical or mental labor, it was all done by humans. But now, much of the execution work previously handled by people is being replaced by AI and tokens. In the future, what will truly be scarce might be a small number of people who can close the loop: those who can set goals, design solutions, drive execution, and ultimately solve problems. Such people, combined with a large number of tokens, constitute the new labor system.
This will directly change corporate organizational structures. In the past, companies had many hierarchical layers because information had to be passed down by people layer by layer. But in the AI era, many middle-management, assistant, IT, and execution roles will be compressed. What's truly valuable will no longer be mere execution ability, but influence, decision-making power, and imagination.
So essentially, in the past, companies paid money to employees; in the future, they will increasingly pay money to tokens, to models and computing power. Model companies then reinvest that money upstream to purchase chips, energy, optical modules, and data centers. These upstream sectors have limited capacity expansion, and supply can't keep up with demand, so they will become the most consistently beneficial links in the AI industry chain. This is the core reason for the continuous rise of related U.S. stocks.
The service industry will be impacted first because knowledge-based services like accounting, law, consulting, and data analysis are the most easily replaceable by AI. In the future, corporate internal operations will become increasingly automated, and interactions between companies may also form on-chain machine economies. By that time, many transactions, collaborations, and even payments will be handled by machines.
Maodi: You mean this round of growth is not just short-term speculation but has medium-to-long-term sustainability, and it might still be in its early stages?
didier: Yes, I think the era of the machine economy has just begun.
Many people also misunderstand the concept of a "one-person company." It's not a single individual working alone, but one person operating with a dozen or dozens of intelligent agents. These agents combined might achieve the efficiency of hundreds of people in the past. So the premise of a so-called one-person company is actually having numerous intelligent agents providing labor power behind the scenes.
This is also why I always emphasize that tokens are the new labor force. In the past, companies spent money to hire people; now, they are increasingly shifting budgets towards tokens. As long as tokens can continuously amplify revenue, corporate profit margins will significantly increase. This is the core logic behind the market's bullishness on the AI industry chain.
So the expectation currently reflected in the U.S. stock market is precisely this: more and more companies will become AI-native, using tokens to replace labor, enhance automation, and thereby significantly raise profit margins. This is the most fundamental and reasonable driving force behind this rally.
Exchanges Shift to U.S. Stocks, Users Don't Need to Rewrite Trading Logic
Maodi: With the continuous rise of U.S. stocks, many crypto exchanges have also opened access to U.S. stock trading. What's your take on this? Is it because there are few hotspots in the crypto industry itself, forcing exchanges to proactively create demand, or is there a deeper reason? Also, could this further lead to capital outflow from the crypto industry?
didier: I've actually said before that offshore CEXs ultimately have only two paths.
The first is to become a prediction market, but that path is very difficult. The top-tier landscape is basically set, and most existing CEXs will find it hard to truly transform into the next-generation "exchange of everything."
The second is to pivot towards becoming distribution channels for real-world assets, and currently the most important real assets are U.S. stocks, U.S. Treasuries, and gold is also a significant direction.
The more fundamental reason is that after all these years, there are actually very few truly valuable crypto-native assets. Bitcoin is one, a few DeFi infrastructure projects and public chains count, but beyond that, most native assets lack sustained intrinsic value and cash flow support. Given that, the trading infrastructure built around these assets will inevitably seek new, valuable targets.
So CEXs shifting to U.S. stocks is essentially a natural progression. I don't think it's a squeeze on crypto assets; it's more like the industry returning to reality: there simply aren't that many truly valuable assets, and exchanges are just pivoting towards things that can better support liquidity.
But in the long run, this might not be a bad thing. The core value of blockchain was never just about issuing native assets, but providing decentralized options and more efficient, lower-cost settlement and trading methods. Tokenizing real-world assets is itself a meaningful direction.
Moreover, looking even further ahead, blockchain is actually more like technology designed for machines. The more likely scenario in the next five to ten years is: humans interacting with agents, and agents completing payments, transactions, and collaborations on-chain with other agents. In that case, the on-chain infrastructure being built today can be directly used by machines.
So from a long-term perspective, I actually think this is positive for Bitcoin. Because whether it's more people or more machines, they will ultimately interact with on-chain assets.
Maodi: For ordinary users who have primarily traded altcoins, Bitcoin, or public chain assets in the crypto market, switching to U.S. stocks involves a different logic. Whether it's earnings cycles, valuation systems, or regulatory rules, there are significant differences. If you had to give one most important piece of advice to these users or traders who have long been in the crypto world, what would it be?
didier: Actually, I don't think they need to deliberately change much.
Because U.S. stocks and on-chain assets are fundamentally similar. U.S. stocks have value stocks, growth stocks, and also many assets with meme attributes. A core reason why this round of on-chain meme trend has weakened is that the most influential meme assets have actually moved to U.S. stocks.
The stories these assets tell are essentially about "changing the world." In the past, this narrative belonged to blockchain. Now, a stronger version appears in U.S. stocks, like quantum computing, nuclear fusion, and SMR (Small Modular Reactors). These things are also often hard to explain solely by earnings reports, cash flows, or DCF models; they inherently carry strong meme-like attributes.
So, for people who used to chase altcoins and meme coins, going to U.S. stocks and chasing these long-term concepts actually follows a similar logic; they might not necessarily feel out of place. Another group, who originally looked at cash flow, fundamentals, and value support, can also find corresponding value stocks and growth stocks in U.S. stocks.
So my point is, all the various styles present in the crypto world actually have their counterparts in U.S. stocks. Most people don't need to forcibly change their trading patterns to find familiar asset types.
If I had to give one piece of advice, it's don't hard-change your own methods just to switch markets. People who have survived until now usually have a proven set of survival strategies. Continuing to stick with what works is more important.
The 1011 Event Severely Damaged Crypto Liquidity, Altcoin Rally Unlikely to Recover
Maodi: Listening to your analysis just now, the picture that emerges in my mind is quite dramatic. It feels like the altcoin speculation of the past period has completely ended, because almost all those speculative targets can now be found in U.S. stocks, with even stronger real-world significance. Can it be understood this way?
didier: Yes, it can be understood that way.
The core reason the altcoin rally is basically over is that crypto liquidity has been too severely damaged. The 1011 event dealt a very heavy blow to the industry's vitality. Superficially, reports mentioned $19 billion in liquidations, but the actual number is likely far greater. Rumors of $40-50 billion circulating are probably closer to the truth.
And note, what was lost here wasn't just market cap, but real cash. The total market cap of the crypto industry isn't that large to begin with, and a significant portion is locked up or inflated. The amount of truly liquid supply is actually much smaller than it appears. In such a context, losing tens of billions in cash in a single day is a heavy blow to the industry's sentiment and liquidity.
So I believe the 1011 event was the final straw that broke the altcoin rally's back.
As for why "meme assets" in U.S. stocks can still be hyped, the reason is simple: because the U.S. stock market is currently the world's most liquid market. When your own liquidity dries up, capital naturally flows towards markets with stronger liquidity.
From the U.S. perspective, its support for Bitcoin and blockchain also has its own strategic considerations. The American version of the logic is to turn blockchain, on-chain markets, and CEXs into channels for U.S. assets to attract global capital and hot money. So promoting the on-chain integration of the U.S. financial system is essentially about expanding the global financing and distribution capabilities of U.S. assets.
Of course, this is just the U.S. government's understanding and approach. Whether the blockchain and crypto world will ultimately be completely shaped by such national will is another matter. A more realistic situation might be that the on-chain world and sovereign nations will long remain in a complex relationship involving cooperation, utilization, and mutual contention.
But at least so far, the U.S.'s line of thinking is indeed gradually becoming reality.
More Cautious on H2 Macro, But Still Long-Term Bullish on AI & Web3
Maodi: What is your macro judgment for the next six months to the end of this year? What policies might the newly appointed Fed Chair (Note: context implies hypothetical future scenario, as current Fed Chair is Powell), and how will they affect the overall market?
didier: I think market uncertainty is increasing going forward.
On one hand, the market has already risen considerably; on the other hand, several giant companies might still go public later, like SpaceX, OpenAI, and Anthropic. The real pressure isn't just from fundraising drawdowns, but that once these trillion-dollar-level companies are quickly included in indices, with limited liquidity, institutions might be forced to sell other index constituents for rebalancing, putting pressure on the market. So after June, I'd be more cautious.
Another key variable is the midterm elections. If the Democrats ultimately win both houses, that could be somewhat bearish for both Web3 and AI, as they emphasize labor rights, regulation, and oversight more, rather than allowing frontier tech to continue expanding rapidly.
But from a fundamental perspective, I think the market may be underestimating AI's real push on the economy. AI has already permeated many sectors; it's just that existing statistical methods might not fully reflect it. So in the long run, its boost to productivity is still very strong.
The real problem isn't just growth, but distribution. If the distribution mechanism isn't adjusted well, an extremely polarized situation could emerge in the future: a small number of people who can leverage AI take most of the gains, while a large portion of the middle class is squeezed or even becomes unemployed. In that case, although productivity increases, overall societal consumption capacity might decline. This is also why I lean more towards long-term deflation rather than long-term inflation.
So in the coming years, the distribution mechanism will be crucial. Things like an AI tax—I think it's highly likely to be implemented within three to five years, because without new sources of tax revenue, many future social arrangements will lack a funding base.
If we only look at the second half of this year to next year, I don't want to make an absolute conclusion. Short-term adjustment pressure is indeed increasing, especially around the time of a potential SpaceX IPO, but I see this more as an adjustment, not a complete top. As long as major companies' capital expenditures can continue, the overall uptrend isn't over yet.
Looking longer-term, I remain bullish on AI and also on the integration of AI and blockchain. The trend of increasing automation within companies and the potential formation of on-chain machine economies between companies hasn't changed.
So I still believe blockchain and Web3 have bright prospects; it's just that the playbook will become more mature. The phase of mindlessly rushing in and profiting is probably over. The future looks more like an era of industrialization and institutionalization.
