Author| WuBlockchain
In this episode of the WuBlockchain podcast, we invited NDV founder Jason Huang to discuss the recent Bitcoin decline, MicroStrategy's selling event, macroeconomic market risks, and opportunities within the crypto industry. Jason believes that the first half of this crypto decline primarily stemmed from the inertial selling pressure of Bitcoin's four-year cycle, while recently it has begun to be compounded by factors such as the U.S. stock market correction, liquidity contraction, and MicroStrategy's debt pressures. He judges that the market has not truly found its bottom yet; a bear market bottom often requires a landmark event similar to the FTX collapse, triggering widespread despair and a state where no one wants to discuss it.
Regarding investment strategy, Jason mentioned that his Fund II has achieved approximately twenty-plus percent returns this year. Besides crypto assets, he has also participated in trading commodities like oil, gold, and silver. He remains cautious about AI stocks, stating that while he is a heavy AI user, he lacks a trading edge in that area; he is also concerned about crowding and bubble risks behind the hype around U.S. stocks, semiconductors, and the potential SpaceX IPO. In contrast to his short-term market pessimism, he remains optimistic about the long-term value of stablecoins within the crypto industry, believing stablecoins are one of the clearest and most practically useful innovations in crypto, with significant room for further adoption.
The guest's remarks do not represent WuBlockchain's views and do not constitute any investment advice. Please strictly adhere to local laws and regulations. Audio transcription and translation were performed by GPT and may contain errors. Please listen to the full podcast:
Xiaoyuzhou:
https://www.xiaoyuzhoufm.com/episode/6a35471543a22a6955866335
MicroStrategy's Sale Triggers Front-Running, BTC Decline Enters Liquidity Squeeze
Maodi: In the last podcast, you predicted a potentially deeper adjustment for the crypto market around 2026. Bitcoin has been declining recently. Do you think this decline aligns with your earlier judgment? Also, what's your take on the current price level? I saw you mentioned around $48,000 on Twitter.
Jason: Even $48,000 may not be the bottom. I didn't specify too much back then because the logic behind each decline cycle differs. It's only recently, especially in the last few days, that I feel this decline has truly started to match my expectations from last September.
The first half seemed more like concentrated selling driven by Bitcoin's four-year cycle. Many long-term traders exit at cycle nodes, triggering stampedes. Meanwhile, the U.S. stock market has remained resilient longer than I expected, but I believe its correction is only now beginning. Against this backdrop, if everyone holds BTC or IBIT, they often prioritize reclaiming liquidity.
Additionally, I didn't expect MSTR to hold on for so long. Only recently has its flywheel mechanism truly started to malfunction. So, I think the magnitude of this decline could be larger than the market expects.
Maodi: The concentrated Bitcoin drop these past two days was somewhat proactively triggered by MicroStrategy, right? Because it only actually sold 32 bitcoins, but the market reaction was significant. Some analysts think this was more about testing market elasticity and that things are still under MicroStrategy's control. What's your view?
Jason: I disagree. Many people attribute too much power to founders, thinking they can 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 stock, then use the proceeds from stock issuance to buy Bitcoin. In an uptrend, this model works because rising coin prices can cover interest and dividends, and the stock price trades at a premium, creating a positive feedback loop.
But when Bitcoin falls rapidly, the stock price shifts from a premium to a discount, while still having to pay real interest and dividends, this mechanism becomes a negative feedback loop.
I think MicroStrategy has indeed overplayed its hand. It originally had around $2 billion in cash to cover preferred stock dividends for the next two years, but it later prepaid a convertible bond due in 2029, using up about $1.2 billion. This left only four months of buffer instead of two years.
In this situation, it either defaults on its bonds, defaults on its preferred stock, or sells Bitcoin. Selling those 32 bitcoins already indicates it made a choice: protect creditors first, then shareholders, and Bitcoin holders last.
What the market is really worried about isn't those 32 bitcoins, but its total holdings of over 800,000 bitcoins. The concern is the potential for much larger selling pressure in the future.
And it's not just MicroStrategy; other large holders have been selling recently because everyone knows MSTR is the biggest potential seller. It's better to run before it does. So, this decline is essentially the market front-running MSTR.
Going forward, the key is to see how MicroStrategy resolves its debt and preferred stock dividend issues in the next four months. It must address them, but the method is still uncertain. If someone is willing to take over a large batch of Bitcoin at a discount later, preventing it from further market selling, then I think that price level would likely be close to a bottom, as it would have restored its payment capacity.
Maodi: But since it has decided to sell Bitcoin to pay the preferred stock interest, why not sell more at once, instead of selling such a small amount first, sending a signal that allows the market to front-run it?
Jason: That's the founder's judgment at a critical moment. He might have thought that selling too much at once would cause more panic; it's better to sell a small amount first, giving a signal to the market while also showing commitment to preferred stock investors. It's just that this judgment ultimately backfired.
Such matters can't be widely discussed; he could only anticipate how the market would interpret it and make what he thought was the optimal decision 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 run repeated experiments.
Fund Returns, Commodities Allocation, and Inflation Trade Judgment
Maodi: When we started talking, you mentioned recently being short. This Bitcoin decline should have been quite profitable for you, right? How is Fund II performing overall?
Jason: This year's returns certainly can't compare to those trading semiconductors or AI, but around twenty-plus percent is decent. Bitcoin is down over 30% this year, and we made about a 20% positive return, so we outperformed Bitcoin by roughly 50% to 60%. The first fund also outperformed Bitcoin by about 60%–70%, and it looks like we might surpass that this time.
Maodi: So your strategy for this fund is similar to the first, focused on Bitcoin and crypto-related assets, without touching AI-related products or stocks, right?
Jason: We indeed didn't touch AI. Honestly, I regret it a bit. I'm a heavy AI user, having subscribed to almost all the good paid products, but ended up not buying related assets—a bit of a disconnect between knowing and doing.
But this year we did engage in other areas, like oil, gold, and silver. For example, part of yesterday's gains came from shorting silver. I think precious metals and crypto assets share similar trading logic—both are supply/demand driven, event-driven, and highly leveraged—but precious metals have a slower pace, making them easier to analyze.
So this year we allocated some energy to commodities. Overall, I think commodities are at an interesting stage. Besides precious metals, another big theme this year is inflation. Oil might be the first wave, with effects gradually spreading to other categories.
Maodi: Regarding inflation, I've discussed it with others recently. One view is that productivity gains from AI might create some deflationary pressure. What's your take?
Jason: At least from what we see now, prices aren't showing obvious deflation. I agree AI has offset some inflation, but many real-world consumptions won't disappear because of AI.
For example, rising oil prices directly increase logistics and production costs. Fuel surcharges on airline tickets are a direct example, and this pressure will continue to spread to more sectors.
Also, I think the "deflation" from AI is more evident in the employment sphere—it might create unemployment. The reality may not be that everyone lives easier because of AI; it's more like wealthy individuals earn more money through AI-related assets, while ordinary people still face inflation and rising living costs.
The U.S. political system will likely adjust to this issue eventually, for example, through redistribution to ease tensions. But if it comes to that, inflation could become even more pronounced.
So what the market is trading now is essentially this conflict: whether inflation arrives first, or AI first delivers on its promise to improve 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 directions might eventually work out, but for trading, the hardest part is never judging the direction, but deciding the timing, the tools, and the method of entry.
Maodi: Besides the fund, I saw you're also working on a project related to sports trading cards. I listened to your podcast on this topic but didn't fully grasp it. Since I don't really follow football, basketball, or collect cards, could you briefly explain what this market is and how it works?
Jason: Simply put, sports trading cards are a very standardized way to "invest in a person" or "invest in an IP." They have a fixed issuance mechanism; they can't be printed infinitely because over-issuance destroys value. So, it's essentially a market with limited supply and long-term operation.
I've always thought sports and anime IP are the consumer goods for this generation. Young people who like a certain athlete or anime character as kids, when they grow up and have purchasing power, are willing to spend on these idols. Sports cards are the category formed under this logic. They have both collectible and investment attributes, tied to the athlete's performance, growth, and personal appeal.
Maodi: From an outsider's perspective, this still seems similar to the early NFT days—things like IP, fractionalized trading. What's the biggest difference compared to NFTs?
Jason: The difference is huge. Many NFT projects back then handled both issuance and trading, making money too quickly and lacking motivation to continue operating the IP. But sports cards are different; they are backed by long-term operating sports leagues and mature IPs that continuously generate attention, so the market foundation is entirely different.
Stablecoins, AI Bubble, and Crypto Bear Market Bottom Judgment
Maodi: Why do you think many exchanges are launching prediction markets now? Many also believe prediction markets might become one of the most important directions in the crypto industry in the near future. What's your view?
Jason: On the surface, it's because prediction markets offer a trading model people are willing to participate in. But a deeper reason is the adoption of stablecoins and wallets has significantly lowered the barrier for new types of exchanges. Running a centralized exchange involves high costs like KYC, user management, fund custody, security hacks, 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 type of exchange. Looking at this logic, centralized exchanges will face significant challenges in the future.
Maodi: You are a heavy AI user yourself, but neither personally nor through the fund have you bought AI-related stocks. Why?
Jason: On one hand, many products I actually use frequently aren't listed yet. On the other hand, I generally avoid areas where I don't have a trading edge. I understand software better, but the market has been hottest on the hardware chain, like optical modules and semiconductors. My research isn't sufficient, and I haven't specifically tried to catch up, so I didn't participate.
Maodi: So, the recent plunge 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 to judge, as my research isn't deep enough. But such a rapid rise makes a correction normal. How deep it will fall is hard to say. Usually, the faster something rises, the faster it falls, because there's definitely a lot of speculative money inside.
Maodi: You previously mentioned several very crowded trades in the market. What's your current view?
Jason: Recently, I've been most focused on semiconductors. This trade has become extremely crowded; I think the stage of upward momentum is almost over. Whether it corrects 20% or 30% is hard to say, but such crowded trades often end with consensus bullishness turning into a stampede.
Maodi: Comparing crypto and AI now, which has a better risk-reward ratio?
Jason: I don't think the crypto market has finished its shakeout yet; it's hard for it to truly recover in the short term. Many people like to find optimistic reasons during declines, but judging from supply/demand and the level of panic, I don't yet see a real bottom. We might be close in terms of timing, but not in terms of magnitude. At least $60,000 might not hold.
Maodi: So we haven't reached a stage like the FTX event yet?
Jason: Not at all. A real bear market bottom often requires a landmark big event that triggers a "crypto is finished" sentiment. It doesn't necessarily have to be an exchange collapse, but at least an event of that scale involving a major player. 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.
Maodi: Many are also pessimistic about the crypto industry itself, feeling it hasn't produced anything truly new over all these years.
Jason: I disagree. Stablecoins are a very clear achievement. They truly deliver "faster, better"—the clearest innovative direction in my understanding. And I'm quite bullish on this sector because its adoption rate is still very low. As long as the market's potential is far from saturated, it wouldn't be strange to see new players emerge.
Maodi: You also mentioned earlier that you're not bullish on U.S. stocks. Is that due to a generally pessimistic macroeconomic environment?
Jason: I just think rising without falling is inherently unreasonable. Market sentiment is getting a bit overheated now; even ordinary people think they might as well invest in stocks. Such phases are usually dangerous. It's not just U.S. stocks; Hong Kong stocks have also gone crazy under the AI narrative.
Some time ago, I heard an investor say he seriously looked at SpaceX's IPO materials and felt it resembled a company about to go bankrupt. Thinking about it later, it's not completely unreasonable. Musk tells a huge story about SpaceX, even suggesting future revenue will come from AI—then you might as well directly buy OpenAI. So, I think there's a clear bubble element here.
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 they naturally choose the hottest market time. Musk is one of the most savvy in capital markets; he never makes losing deals. So, to think there will be much profit left for ordinary investors in the secondary market post-IPO, I don't really buy that.
Maodi: People do seem a bit path-dependent now.
Jason: Right, as if you can just buy and hold to make money. I just think that kind of inertia is dangerous in itself.
Outlook Judgment: Wait for Real Panic and Clearing Before Considering a Bottom-Fish
Maodi: Finally, please share your judgment 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; I can't even see where its bottom might be. As for Bitcoin, looking at a one-year timeframe, I think the price might end up similar to now, but the process will likely involve a sharp drop first, followed by a significant rebound. In other words, we might be close to the bear bottom in terms of timing, but not necessarily in terms of magnitude; $48,000 might not hold either.
Maodi: So you lean towards waiting for an event-driven bottom?
Jason: Yes. A real bottom usually accompanies a landmark major event. By then, you'll know something happened in the market without checking charts or news; your social feeds will be flooded with reactions and complaints. The FTX collapse was that kind of event.
We're not there yet. People are declining, but it's more like numbness, not real panic. A real bear bottom often appears after panic is fully released, when no one wants to look at the market anymore. That kind of bottom is clear in hindsight, but at the moment, you usually don't want to buy at all.
Maodi: So when no one wants to buy at all, how do you convince yourself to pull the trigger?
Jason: I still look at adoption rates and consensus diffusion. As long as something has network effects and is only recognized by a small core group of users, far from reaching saturation, then the story isn't over. That's true for Bitcoin, and it's also true for sports cards.
So I have a cognitive anchor in mind first: Is this thing still early? Is the long-term potential still there? How exactly to buy and what drawdown to accept are matters of trading execution.
When things are at their most pessimistic, 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 targets, buy when they're hit, and then continue not to watch. Because daily chart-watching inevitably affects emotions and interferes with judgment. For long-term holding, staying away from noise is more important.
