Interview with NDV Founder Jason Huang: Popping the AI Bubble and the Myth of Microstrategy, Seeking the Ultimate Ace in the Crypto Market

Author | Wu Says Blockchain

In this episode, Wu Says Podcast invites NDV founder Jason Huang to discuss the recent decline in Bitcoin, the MicroStrategy selling incident, macro market risks, and opportunities in the crypto industry. Jason believes that the first half of this crypto downturn is mainly due to the inertia selling pressure from Bitcoin's four-year cycle, and recently it has started to overlap with factors such as the correction in U.S. stocks, liquidity contraction, and MicroStrategy's debt pressure. He judges that the market has not truly bottomed yet, as a bear bottom often requires a signature event similar to the FTX collapse, triggering widespread despair and a state of no discussion.

Regarding investment strategy, Jason states that his second-phase fund has achieved a return of about twenty percent this year. In addition to crypto assets, it has also participated in trading commodities such as oil, gold, and silver. He remains cautious about AI stocks, believing that although he is a heavy AI user, he lacks a trading advantage; he is also concerned about the crowded trades and bubble risks behind the enthusiasm for U.S. stocks, semiconductors, and SpaceX's IPO. Unlike his pessimism about the short-term market, he still sees long-term value in stablecoins within the crypto industry, considering stablecoins one of the most clear and practically useful innovations in the crypto field, with significant room for penetration in the future.

Guest statements do not represent Wu Says' views and do not constitute any investment advice. Please strictly follow local laws and regulations. Audio transcription and translation completed by GPT, may contain errors. Please listen to the full podcast:

Xiaoyuzhou:

https://www.xiaoyuzhoufm.com/episode/6a35471543a22a6955866335

MicroStrategy's coin sale triggers a liquidity squeeze, BTC falls into a liquidity crunch

Cat Brother: In the last podcast, you predicted that the crypto market might experience a deeper adjustment in 2026. Recently, Bitcoin has been continuously declining. Do you think this downturn aligns with your previous judgment? Also, what do you think about the current position? I saw you mentioned around $48,000 on Twitter.

Jason: $48,000 may not necessarily be the bottom. I didn't specify too much at that time because the logic behind each downturn is different. It wasn't until recently, especially in the last couple of days, that I felt this downturn truly began to align with my expectations from last September.

The first half resembles concentrated selling under Bitcoin's four-year cycle. Many long-term traders exit at cycle nodes, triggering a stampede. Meanwhile, the U.S. stock market has remained stronger for longer than I expected, but I believe its correction has just begun. In this context, if everyone holds BTC or IBIT, they often prioritize recovering liquidity.

Additionally, I didn't expect MSTR to hold out for so long. It was only recently that its flywheel mechanism began to show real problems. Therefore, I think the magnitude of this downturn may be larger than the market expects.

Cat Brother: The recent concentrated decline in Bitcoin can be seen as actively triggered by MicroStrategy. They only sold 32 Bitcoins, but the market reacted strongly. Some analysts believe this is more like testing market elasticity and that the situation is still within MicroStrategy's control. What do you think?

Jason: I disagree. Many people overestimate the founder's control, as if he can manage everything, but that's not the case. Entrepreneurs often have to make judgments in uncertainty when facing the future.

MicroStrategy's original model was to borrow, issue preferred stock, and then buy Bitcoin through stock issuance. This model works during an upward cycle because rising coin prices can cover interest and dividends, and the stock price has a premium, creating a positive flywheel.

However, when Bitcoin rapidly declines, and the stock price shifts from a premium to a discount while real interest and dividends must still be paid, this mechanism turns into a negative cycle.

I think MicroStrategy has indeed gone a bit too far. It originally prepared about $2 billion in cash to pay preferred stock dividends for the next two years, but later it prematurely handled a convertible bond maturing in 2029, consuming about $1.2 billion, leaving only four months of the originally planned two-year buffer.

In this situation, it faces either bond default, preferred stock default, or selling coins. Selling those 32 Bitcoins already indicates a choice: prioritize creditors, then shareholders, and finally Bitcoin holders.

What the market is truly worried about is not those 32 Bitcoins, but the total of over 800,000 Bitcoins it holds. People are concerned about the potential for larger selling pressure in the future.

Moreover, it's not just them; recently some large holders are also selling because everyone knows MSTR is the biggest potential selling pressure. Rather than waiting for them to act, it's better to run first. So this downturn is essentially the market rushing to exit ahead of MSTR.

Next, the key will be how MicroStrategy resolves its debt and preferred stock dividend issues in the next four months. It must address these, but the method is still uncertain. If someone is willing to take over a large batch of Bitcoins at a discount to prevent further market sell-offs, I think that position is likely close to a temporary bottom, as it would restore their payment capability.

Cat Brother: But since they have decided to sell coins to pay preferred stock dividends, why not sell a bit more at once instead of just such a small amount, sending out a signal that ultimately leads the market to rush ahead of them?

Jason: This is the founder's judgment at a critical moment. He might have felt that if he sold too much at once, the market would panic more; it was better to sell a little first to signal the market and also communicate with preferred stock investors. However, this judgment ultimately got out of control.

Such matters cannot be widely discussed; he can only predict how the market will interpret it and then make decisions based on what he believes is the optimal judgment at that time.

Moreover, we cannot prove that if he had sold more at once, the market's reaction would have been better. The market's interpretation of information is dynamic; he can only make one choice, not experiment repeatedly.

Fund returns, commodity layout, and inflation trading judgment

Cat Brother: When we started chatting, you mentioned you were shorting recently. This Bitcoin downturn should have been quite profitable for you, right? How is the overall situation of your second-phase fund now?

Jason: This year's returns are certainly not as good as trading semiconductors or AI, around twenty percent, which is still acceptable. Bitcoin has overall dropped more than thirty percent this year, and our positive returns are about 20%, so we have outperformed Bitcoin by about 50% to 60%. The previous fund also outperformed Bitcoin by about 60% to 70%, and it seems we have a chance to exceed that number now.

Cat Brother: So your strategy this time is similar to the first phase, still focusing on Bitcoin and crypto-related assets, without touching AI-related products or stocks, right?

Jason: We indeed haven't touched AI. To be honest, I regret it a bit. Because I am a heavy AI user and have paid for almost all the good products available, but in the end, I didn't buy related assets, which feels a bit inconsistent.

However, this year we have also done some other things, such as oil, gold, and silver. For example, part of our gains yesterday came from shorting silver. I think the trading logic of precious metals is very similar to that of crypto assets; both are driven by supply and demand, event-driven, and have high leverage, but the rhythm is slower and easier to analyze.

So this year we have diverted some of our energy into commodities. Overall, I think commodities are in a quite interesting phase. This year, besides precious metals, another major theme is inflation. Oil may be the first wave, and it will gradually transmit to other categories.

Cat Brother: Regarding inflation, I have also discussed it with others recently. There is a viewpoint that the productivity improvements brought by AI may, to some extent, lead to deflation. What do you think?

Jason: At least from now, prices do not show obvious signs of deflation. I also agree that AI has indeed hedged some inflation, but many real-world consumptions will not disappear because of AI.

For example, rising oil prices will directly push up logistics and production costs. The fuel surcharge in airline tickets is a very direct example, and this pressure will continue to transmit to more fields.

Additionally, I think the "deflation" brought by AI is more reflected in the employment aspect, meaning it may create unemployment. The reality is not that everyone has an easier life because of AI; rather, it seems that the wealthy are making more money through AI-related assets, while ordinary people still have to bear the pressure of inflation and rising living costs.

The U.S. political system will likely make adjustments to this issue, such as through redistribution to ease conflicts. But if it really comes to that point, inflation may become more apparent.

So what the market is trading now is essentially this contradiction: whether inflation comes first or AI first delivers on its promise to improve efficiency and lower costs. For now, AI seems to be the stronger line, but events like SpaceX's IPO may also further drain market liquidity.

So many directions may eventually work out, but for trading, the hardest part has never been judging direction, but rather when to intervene, with what tools, and in what manner.

Cat Brother: Besides the fund, I see you are also working on a project related to sports cards. I heard you talk about this topic in a podcast before, but I didn't quite understand. Since I don't follow football or basketball much and don't play cards, could you briefly explain what this market is and how it operates?

Jason: In simple terms, sports cards are a very standardized way to "invest in a person" or "invest in an IP." They have a fixed issuance mechanism and will not be issued infinitely, as too many would devalue them. So it is essentially a market with limited supply and long-term operation.

I have always believed that sports and anime IPs are consumer goods for this generation. Young people who liked a certain star or anime character when they were young will be willing to pay for these idols when they grow up and have purchasing power. Sports cards are a category formed under this logic. They have both collectible and investment attributes, related to players' performance, growth, and personal charm.

Cat Brother: But from an outsider's perspective, this seems somewhat similar to NFTs from back in the day, such as IP and fragmented trading. What is the biggest difference between it and NFTs?

Jason: The difference is significant. Many NFT projects back then both issued and circulated, making money too quickly, and later had no motivation to continue operating the IP. But sports cards are different; they are backed by real long-term operating sports leagues and mature IPs that continuously create attention, so the market foundation is entirely different.

Stablecoins, AI bubbles, and crypto bear bottom judgment

Cat Brother: Why do you think many exchanges are now engaging in prediction markets? Some believe that prediction markets may become one of the most important directions in the crypto industry for a while. What do you think?

Jason: On the surface, it's because prediction markets provide a trading model that people are willing to participate in; but the deeper reason is that the popularity of stablecoins and wallets has significantly lowered the threshold for new exchanges. Running a centralized exchange involves handling a whole set of high-cost issues like KYC, user management, fund custody, hackers, and regulation, but platforms like Polymarket keep funds in users' wallets, only facilitating matching. This represents not just prediction markets but the rise of a new type of exchange. Following this logic, centralized exchanges will face significant challenges in the future.

Cat Brother: You are a heavy AI user, but neither personally nor through the fund have you bought AI-related stocks. Why?

Jason: On one hand, many of the products I regularly use are not yet on the market; on the other hand, I generally avoid areas where I lack a trading advantage. I understand software better, but the most speculated are hardware chains, such as optical modules and semiconductors, which I haven't researched enough and haven't specifically supplemented, so I didn't participate.

Cat Brother: Recently, AI hardware stocks have plummeted. Do you think this is just a normal correction, or is the bubble still in its early stages?

Jason: I dare not make a judgment because I haven't researched enough. But it is normal for a short-term surge to see a correction. As for how deep it will fall, it's hard to say. Generally, the faster something rises, the faster it falls, because there is certainly a lot of speculative money involved.

Cat Brother: You previously mentioned that there are several crowded trades in the market. What do you think now?

Jason: Recently, I am most concerned about semiconductors; this trade has become very crowded, and I think the phase of rising is about to end. As for whether it will correct by 20% or 30%, it's hard to say, but such crowded trades often shift from a consensus bullish outlook to mutual stampedes.

Cat Brother: Compared to AI, which currently has a higher risk-reward ratio, crypto or AI?

Jason: I think the crypto market has not finished washing out yet, and it is difficult to truly rise in the short term. Many people like to find optimistic reasons during downturns, but from the perspective of supply and demand and panic levels, I currently do not see a real bottom. It may not be far from the bottom in time, but in terms of magnitude, I think it hasn't reached it; at least $60,000 may not hold.

Cat Brother: So we are not yet at the stage of FTX back then?

Jason: Not at all. A true bear bottom often requires a signature major event that creates a sentiment of "crypto is over." It doesn't necessarily have to be a specific exchange collapsing, but at least a player of that magnitude must have an incident. Right now, everyone is just numb from the decline, not truly desperate. The real bottom usually appears after panic is fully released, when everyone no longer wants to look at the market.

Cat Brother: Many people are also quite pessimistic about the crypto industry itself, feeling that nothing truly new has emerged over the years.

Jason: I disagree; stablecoins are a very clear achievement. They have truly achieved "faster and better," which is the clearest direction of innovation in my understanding. Moreover, I am very optimistic about this track because its penetration rate is still very low. As long as the market space is far from its peak, it would not be surprising to see a few new players emerge in the future.

Cat Brother: You also mentioned that you are not optimistic about U.S. stocks. Is it due to an overall pessimistic macro environment?

Jason: I just think that only rising without falling is itself unreasonable. The current market sentiment is somewhat overheated; even ordinary people feel that it is better to trade stocks, which is usually a dangerous stage. It's not just U.S. stocks; Hong Kong stocks are also crazy under the AI narrative.

Not long ago, I heard an investor say that after seriously reviewing SpaceX's IPO materials, it felt like a company on the verge of bankruptcy. Upon reflection, it’s not entirely unreasonable. Musk has painted a grand story for SpaceX, even claiming that many future revenues will come from AI, so why not just buy OpenAI directly? Therefore, I think there are quite obvious bubble components in this.

Moreover, IPOs are often the last big opportunity for founders and teams to take the most money from the market in the short term, so they will certainly try to go public at the hottest market time. Musk is one of the best at capital markets; he never does unprofitable business. So if you say that after going public, there will still be a lot of profits left for ordinary investors in the secondary market, I don't really believe that.

Cat Brother: People are indeed a bit path-dependent now.

Jason: Yes, it seems that as long as you buy in and hold, you can make money. I just think this inertia itself is already very dangerous.

Judgment on the future market: wait for a real panic to clear before considering bottom fishing

Cat Brother: Finally, please judge the performance of Bitcoin and Ethereum in the coming year. After all, your predictions last year were quite accurate.

Jason: I am very pessimistic about Ethereum; I can't even see where its bottom is. As for Bitcoin, if viewed over a year, I think the final price may be similar to now, but the process will likely involve a significant drop followed by a substantial rebound. In other words, the time may not be far from the bear bottom, but in terms of magnitude, it may not be in place; $48,000 may not hold.

Cat Brother: So you prefer to wait for an event-driven bottom?

Jason: Yes. A true bottom usually accompanies a signature major event. By that time, you won't need to watch the market or the news; you'll know something has happened because your social circle will be filled with posts and complaints. Like the FTX explosion back then, it was of that level.

It's not the case now. Although everyone is falling, it feels more like being numb from the decline, not real panic. The true bear bottom often appears after panic is completely released, when everyone no longer wants to look at this market. That kind of bottom, in hindsight, is very clear, but at the moment, you usually don't want to buy at all.

Cat Brother: So how do you convince yourself to take action during times when no one wants to buy?

Jason: I still look at penetration rates and consensus diffusion. As long as something has network effects and is only recognized by a small group of core users, far from reaching the penetration ceiling, then the story is not over. Bitcoin is like this, and sports cards are too.

So I will first have a cognitive anchor in my mind: is this thing still early, is there still long-term space? As for how to buy specifically and how much drawdown I can accept, that is a trading-level matter.

When it really comes to the most pessimistic time, it’s better not to keep staring at the market. I think a very effective method is to leave the market, like going on a trip. Set your price, and when it reaches that, buy, then continue not to look. Because staring at the market every day will definitely affect emotions and interfere with judgment. For long-term holding, staying away from noise is even more important.