NDV Founder Jason: MicroStrategy overplayed its hand, panic selling to consider bottom fishing

Author: Wu Talks Blockchain

This episode of the podcast invites NDV founder Jason Huang to discuss recent Bitcoin declines, MicroStrategy's coin sales, macro market risks, and opportunities in the crypto industry. Jason believes that the first half of this round of crypto decline mainly stemmed from inertial selling pressure within Bitcoin's four-year cycle, and recently has begun to be compounded by factors such as the US stock market correction, liquidity contraction, and MicroStrategy's debt pressure. He judges that the market has not truly bottomed out yet; bear markets often require landmark events akin to the FTX collapse, triggering widespread despair and silence.

In terms of investment strategy, Jason states that his second-phase fund has yielded about twenty-plus percentage points this year, and besides crypto assets, he also participates in commodities trading such as oil, gold, and silver. He remains cautious on AI stocks, believing that although he is a heavy AI user, he lacks trading advantages; at the same time, he is wary of crowded trades and bubble risks behind the enthusiasm for US stocks, semiconductors, and SpaceX IPOs. 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 clearest and most practically useful innovations in crypto, with significant future penetration potential.

MicroStrategy's coin sales trigger rush, BTC enters liquidity squeeze

Brother Mao: In your previous podcast, you predicted that the crypto market might see a significant correction by 2026. Recently, Bitcoin has continued to decline. Do you think this decline aligns with your earlier judgment? Also, what’s your view on the current position? I saw you mentioned around $48k on Twitter.

Jason: $48k may not be the bottom either. I didn’t specify too precisely back then because each decline cycle has different logic. Only recently, especially in the past couple of days, do I feel that this decline truly started to match my September last year expectations.

The first part was more like concentrated selling within Bitcoin’s four-year cycle. Many long-term traders tend to exit at cycle nodes, causing a stampede. Meanwhile, the US stock market held up longer than I expected, but I believe its correction has only just begun. Against this backdrop, if everyone holds BTC or IBIT simultaneously, they tend to prioritize liquidity recovery.

Additionally, I didn’t expect MSTR to hold out this long. Only recently did its flywheel mechanism really start to break down. So I think the magnitude of this decline might be larger than market expectations.

Brother Mao: The recent concentrated drop in Bitcoin, to some extent, was actively triggered by MicroStrategy. Because it only sold 32 Bitcoin, but the market reacted strongly. Some analysts think this is more like testing market resilience; the situation is still within MicroStrategy’s controllable range. What’s your view?

Jason: I disagree. Many people overestimate founders, thinking they can control everything, but that’s not the case. Entrepreneurs often have to make judgments in uncertainty about the future.

MicroStrategy’s original model was: borrow money, issue preferred stock, then buy Bitcoin through share issuance. During bullish cycles, this model works because rising Bitcoin prices can cover interest and dividends, and the stock price often trades at a premium, creating a positive flywheel.

But when Bitcoin drops sharply, and the stock price shifts from premium to discount, while they still need to pay real interest and dividends, this mechanism turns into a negative cycle.

I think MicroStrategy has indeed overplayed its hand. It originally prepared about $2 billion in cash to pay future preferred stock dividends over two years, but then it preemptively handled a convertible bond due in 2029, consuming about $1.2 billion, leaving only four months of buffer instead of two years.

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

What the market is truly worried about isn’t those 32 Bitcoin, but the total of over 800,000 Bitcoin it holds. The concern is about potential larger selling pressure in the future.

And it’s not just MicroStrategy; some large holders have also been selling recently because everyone knows that MSTR is the biggest potential sell pressure. Instead of waiting for it to sell, others are rushing to exit first. So this decline is essentially the market front-running MSTR.

Next, the key is to see how MicroStrategy handles its debt and preferred dividends over the next four months. It must address these issues, though the approach is still uncertain. If someone is willing to buy a large batch of Bitcoin at a discount to prevent further sales, I think that position is likely close to a temporary bottom, because it would restore its payment capacity.

Brother Mao: But since it has already decided to sell coins to pay interest on preferred stock, why not sell more at once, instead of just a small amount, to send a stronger signal, and avoid the market front-running it?

Jason: That’s a judgment made by the founder at a critical moment. He might have thought that selling too much at once would cause more panic; better to sell a little first, to send a signal to the market and also to preferred investors. But ultimately, that judgment got out of control.

Such decisions are not meant for broad discussion; he can only predict how the market will interpret it and make decisions based on what he considers optimal at the time.

And we can’t prove that if he had sold more at once, the market’s reaction would have been better. Because market interpretation of information is dynamic; he can only make one choice, not test repeatedly.

Fund performance, commodities allocation, and inflation trading outlook

Brother Mao: When we started talking, you mentioned recently shorting. This Bitcoin decline should have been quite profitable for you, right? How is your second-phase fund doing overall?

Jason: This year’s returns definitely won’t match those from semiconductors or AI plays, probably around twenty-something percent, so it’s decent. Bitcoin has fallen over 30% overall this year, and our positive returns are about 20%, so we’ve roughly outperformed Bitcoin by 50% to 60%. The previous fund also outperformed Bitcoin by about 60%–70%, and now we hope to surpass that.

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

Jason: I haven’t touched AI for real. Honestly, I kind of regret it. Because I’m a heavy AI user, I’ve paid for almost all good paid products, but in the end, I didn’t buy related assets, which is a bit inconsistent.

But this year, we also diversified into other areas, like oil, gold, and silver. For example, yesterday some gains came from shorting silver. I think precious metals and crypto trading share similar logic: driven by supply and demand, event-driven, highly leveraged, just with a slower rhythm and easier to analyze.

So this year, we’ve spread some focus into 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, gradually transmitting to other categories later.

Brother Mao: About inflation, I’ve recently discussed with others. Some believe that AI-driven productivity gains could, to some extent, lead to deflation. What’s your view?

Jason: At least from now, prices haven’t shown clear signs of deflation. I agree AI does hedge some inflation, but many real-world consumption activities won’t disappear just because of AI.

For example, rising oil prices will directly push up logistics and production costs. Fuel surcharges in airline tickets are a direct example, and this pressure will continue to propagate into more areas.

Additionally, I think the “deflation” brought by AI is more reflected in employment—meaning it might create unemployment. The reality is not that everyone will live easier because of AI; rather, the wealthy might earn more from AI-related assets, while ordinary people still bear the brunt of inflation and rising living costs.

The US political system will likely make adjustments to this issue eventually, such as through redistribution to ease tensions. But if it really comes to that, inflation could become even more apparent.

So, the current market’s core contradiction is: will inflation come first, or will AI deliver on its promise to improve efficiency and lower costs? For now, AI seems stronger, but events like SpaceX’s IPO could further drain market liquidity.

Many paths might eventually emerge, but for trading, the hardest part is never predicting the direction, but timing, tools, and methods of intervention.

Brother Mao: Besides the fund, I see you’re also working on a project related to sports star cards. I listened to your podcast on this topic but didn’t quite understand. Since I don’t follow football or basketball much, nor do I collect cards, could you briefly explain what this market is and how it operates?

Jason: Simply put, sports star cards are a very standardized way of “investing in a person” or “investing in an IP.” They have a fixed issuance mechanism, and won’t be infinitely issued, because too many would devalue them. Essentially, it’s a market with limited supply and long-term operation.

I’ve always believed that sports and anime IPs are the consumer products of this generation. Young people like a certain star or anime character in childhood, and when they grow up with spending power, they’re willing to pay for these idols. Star cards are a product formed under this logic. They have both collectible and investment attributes, linked to players’ performance, growth, and personal charisma.

Brother Mao: But from an outsider’s perspective, this is somewhat similar to NFTs, like IP and fragmented trading. What’s the biggest difference?

Jason: A big difference. Many NFT projects back then did both issuance and circulation, earning money very quickly, but lacked motivation to continue operating the IP. But sports star cards are backed by real, long-term operated sports leagues and mature IPs, which continuously generate attention, so the market foundation is completely different.

Stablecoins, AI bubbles, and crypto bear market bottom judgments

Brother Mao: Why do you think many exchanges are now creating prediction markets? Many also believe prediction markets could become one of the most important directions in crypto for some time. What’s your view?

Jason: On the surface, it’s because prediction markets offer a trading model that people are willing to participate in; but deeper down, it’s mainly due to the widespread adoption of stablecoins and wallets, significantly lowering the barrier for new exchanges. Running centralized exchanges involves handling KYC, user management, custody, hacking, and regulation—high costs. Platforms like Polymarket keep funds in users’ wallets, only doing matching. This not only represents prediction markets but also the rise of a new type of exchange. Following this logic, centralized exchanges will face significant impact in the future.

Brother Mao: You’re a heavy AI user, but neither personally nor through your fund have you bought AI-related stocks. Why?

Jason: One, many of the products I use are not yet listed; two, I generally avoid trading areas where I lack an advantage. I understand software better, but the hardware chain—like optical modules and semiconductors—is too speculative, I haven’t researched enough or invested in it, so I haven’t participated.

Brother Mao: Recently, AI hardware stocks have fallen sharply. Do you think it’s just a normal correction, or is the bubble still in early stages?

Jason: I can’t judge because I haven’t researched enough. But a rapid rise over a short period is normal to correct. How deep it will fall is hard to say. Usually, the faster it rises, the faster it falls, because there’s a lot of speculative capital involved.

Brother Mao: You previously mentioned that there are several crowded trades in the market. How do you see them now?

Jason: I’m most focused on semiconductors lately; that trade is very crowded. I think the phase of rapid rise is about to end. As for a 20% or 30% correction, it’s hard to say, but crowded trades tend to shift from consensus bullishness to mutual踩踏.

Brother Mao: Compared to AI, which has a higher risk-reward ratio now?

Jason: I think the crypto market hasn’t finished resetting; it’s hard to truly rally in the short term. Many people look for optimistic reasons during declines, but based on supply-demand and panic levels, I don’t see a real bottom yet. It might not be far from the bottom in time, but the magnitude isn’t there yet; at least $60k may not hold.

Brother Mao: So it’s not yet at the stage of FTX’s collapse?

Jason: Not at all. True bear bottoms usually require a landmark event that triggers “crypto is over” sentiment. It doesn’t necessarily have to be a specific exchange failing, but at least a player of that scale must have an incident. Right now, everyone is just shaken, not truly despairing. The real bottom often appears after panic is fully released, when no one wants to look at the market anymore. That bottom is clear in hindsight, but at the moment, you usually don’t want to buy at all.

Brother Mao: When everyone is reluctant to buy, how do you convince yourself to act?

Jason: I still look at penetration and consensus spreading. As long as something has network effects and is only recognized by a small core group, and hasn’t reached penetration saturation, the story isn’t over. Bitcoin is like that, star cards are like that.

So I first anchor myself with the cognition: is this still early, is the long-term potential still there? The specifics of how to buy and how much retracement I can accept are trading details.

When it’s at its most pessimistic, it’s better not to watch the market constantly. A very effective method is to step away, like going traveling. Set your target price, buy when it hits, then stop watching. Because watching every day will affect your emotions and interfere with judgment. For long-term holding, staying away from noise is more important.