Author: WuBlockchain

Frontier tech investor Zheng Di (didier) appeared on a podcast, discussing the recent Bitcoin decline, changes in Strategy's (formerly MicroStrategy) financial strategy, the AI-driven US stock market rally, crypto exchanges integrating US stocks, and the macro outlook.

didier believes the core reason for Bitcoin's recent decline is not simply macro factors or ETF redemptions, but the market beginning to reprice the expectation that Strategy, under the "Bitcoin-per-share neutral" principle, may continuously sell small amounts of Bitcoin to pay preferred stock dividends. Meanwhile, AI is reshaping the labor structure, with tokens seen as a new factor of production, driving the sustained rally in the US stock AI supply chain. The crypto industry may gradually shift from native altcoin speculation towards real-world asset tokenization, on-chain machine economies, and a more mature industrialization phase.

Strategy's Bitcoin Selling Experiment: Continuous Selling Pressure Expectations and Market Absorption Game

Maodi: Bitcoin has fallen sharply recently, and there are many explanations in the market. Some say Strategy is selling coins, some say it's ETF redemptions, others attribute it to macro changes or leverage liquidations. Which factor do you think is most critical?

didier: I think the core is still Strategy, but what's really suppressing the market isn't that single coin sale itself, but the market starting to expect it will sell coins continuously.

At its May earnings call, Strategy proposed maintaining Bitcoin-per-share neutrality. With the increasing number of preferred stocks and debt instruments like STRC, STRZ, STRD, and STRF, Bitcoin is no longer just an asset for common shareholders but must first cover the interests of creditors and preferred shareholders. This makes the cost of maintaining BPS neutrality higher.

In the past, the market believed it mainly paid preferred stock dividends by selling shares, with little pressure on Bitcoin; but now the threshold for financing through new share sales has risen, and the pressure is starting to shift towards Bitcoin. As long as MMV remains below the neutral threshold, it is more likely to cover cash flow through small, continuous coin sales. Especially if the frequency of interest payments increases further, the market will naturally expect it not to sell occasionally, but possibly to sell a little every so often.

So the key to this round of decline is not "how much was sold," but "will it keep selling in the future." Under this logic, ETF selling looks more like a result than a cause. Because once the market judges that Strategy will continue selling later, related funds will withdraw in advance.

Maodi: You just said Michael Saylor seems to be conducting a financial experiment. What is the purpose of this experiment?

didier: Essentially, he is testing the market's capacity to absorb continuous small-scale coin sales.

From a financial perspective, when the MMV premium is not high, selling small amounts of coins is less damaging to Bitcoin-per-share than selling shares; this is the first-order optimal solution. The problem is, after the large-scale issuance of STRC in March, the interest and dividend expenses of preferred stocks and perpetual instruments have increased significantly, making cash flow management an unavoidable 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 this continuous, small-scale coin selling, then this system can continue to be maintained; but if this approach instead depresses the stock price, lowers MMV, exacerbates de-pegging, and further strengthens the expectation of "continuous coin selling," then it may have to make a soft pivot, such as relying more on selling shares again, or using a mix of share and coin sales. Although this would sacrifice some Bitcoin-per-share, it could mitigate the impact on coin price and stock price, representing a second-order optimal solution.

So essentially, this is now a game between Michael Saylor and the market. He is watching to see at what level sufficiently strong buying support will appear, while the market is waiting for a lower, more certain price before stepping in.

Maodi: Could this evolve into a "death spiral" for both Strategy and Bitcoin?

didier: I think this event alone is unlikely to cause that. To really reach that point, it would usually require additional new macro headwinds or a larger systemic shock.

As long as there is a soft pivot later, stopping rigid coin sales, bargain-hunting funds will likely return. The question is not whether there is absorption, but at what price absorption will occur. It could be $62,000, or lower; the market is now just waiting for that level.

So my judgment remains cautiously optimistic: this decline is more of a structural pressure brought about by changes in Strategy's own financial structure, rather than simply triggered by macro liquidity tightening. Without significant new negative factors, the situation can likely still be reversed, and it's not very easy to directly evolve into a true "death spiral."

Tokens Seen as the New Era's Labor Force

Maodi: Although the crypto industry is currently quite sluggish, AI is very hot, especially in the US stock market, where optical modules, semiconductors, and data centers have all risen sharply. What do you think is the core driver behind this?

didier: The core is actually quite simple: tokens are essentially becoming the labor force of the new era.

In the past, the core factor of production for enterprises was people; whether physical or mental labor, it was all done by people. But now, many execution tasks originally undertaken by people are being replaced by AI and tokens. In the future, what may truly be scarce are only a few individuals who can complete the loop: those who can propose goals, design plans, drive execution, and ultimately solve problems. Such individuals, combined with a large number of tokens, constitute a new labor system.

This will directly change corporate organizational structures. In the past, companies had many layers because information had to be transmitted layer by layer by people; but in the AI era, many middle management, assistant, IT, and execution roles will be compressed. What is truly valuable will no longer be pure 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 invest money upstream to purchase chips, energy, optical modules, and data centers. Since upstream expansion is limited and supply cannot keep up with demand, these will become the most sustained beneficiaries in the AI industry chain, which is also the core reason for the continuous rise of related US stocks.

The service industry will be hit first, because knowledge-based services like accounting, law, consulting, and data analysis are inherently the most easily replaceable by AI. In the future, internal corporate operations will become increasingly automated, and machine economies on-chain may also form between enterprises. By then, many transactions, collaborations, and even payments will be completed by machines.

Maodi: You mean this round of rally is not just short-term speculation, but has medium-to-long-term sustainability, and we might still be in the very 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 one person fighting alone, but one person operating with a dozen or dozens of agents. These agents combined might be equivalent to the efficiency of hundreds of people in the past. So the premise of a so-called one-person company is actually having a large number of agents providing labor behind the scenes.

This is also why I keep emphasizing that tokens are the new labor force. In the past, companies spent money hiring people; now, they are increasingly shifting budgets towards tokens. As long as tokens can continuously amplify revenue, corporate profit margins will significantly improve, which is precisely the core logic behind the market's bullishness on the AI industry chain.

So what the US stock market is currently reflecting in its expectations is essentially this: more and more companies will become AI-native companies, replacing labor and improving automation levels through tokens, thereby significantly boosting profit margins. This is also the most fundamental and reasonable driving force behind this rally.

Exchanges Pivot to US Stocks, Users Need Not Rewrite Trading Logic

Maodi: As the US stock market continues to rise, many crypto exchanges have also opened channels for US stocks. What do you think about this? Is it because the crypto industry itself lacks hot topics, forcing exchanges to proactively create demand, or is there a deeper reason? Also, could this further lead to capital outflows from the crypto industry?

didier: I actually said long ago that offshore CEXs ultimately only have two paths.

The first is to become prediction markets, but this path is very difficult. The top-tier landscape has basically formed, and it's hard for most existing CEXs to truly transform into the next generation of "everything exchanges."

The second is to pivot towards becoming distribution channels for real-world assets, and the most important real assets right now are US stocks, US bonds, with gold also being an important direction.

The more fundamental reason is that, over all these years, there have actually been very few truly valuable crypto-native assets. Bitcoin counts as one, a few DeFi infrastructures and public chains also count, but beyond that, most native assets lack sustained intrinsic value and cash flow support. Given this, the trading infrastructure built around these assets will eventually have to seek out new, valuable targets.

So CEXs pivoting to US stocks is essentially a very natural thing. I don't really see it as squeezing crypto assets; it's more like the industry returning to reality: there weren't many truly valuable assets to begin with, and exchanges are simply turning to things that can better support liquidity.

But in the long run, this may not be a bad thing. The core value of blockchain has never been just about issuing native assets, but about providing decentralized options and more efficient, lower-cost settlement and trading methods. Tokenizing real-world assets is itself a meaningful direction.

And from a longer-term perspective, blockchain actually seems more like a technology designed for machines. In the next five to ten years, a more likely scenario is: humans interact with agents, and agents complete payments, transactions, and collaborations with each other on-chain. In this way, the on-chain infrastructure being built today can be directly used by machines.

So from a long-term view, I actually think this is bullish for Bitcoin. Because whether it's more people or more machines, they will eventually come into contact with on-chain assets.

Maodi: For ordinary users who previously mainly speculated on altcoins, Bitcoin, or public chain assets in the crypto market, switching to US stocks now involves quite different logic. Whether it's earnings report cycles, valuation systems, or regulatory rules, there are big differences. If you were to give one most important piece of advice to these users or traders who have long been in the crypto world, what would you say?

didier: Actually, I don't think they need to deliberately change too much.

Because US stocks and on-chain assets are very similar in nature. In US stocks, there are value stocks, growth stocks, and also many assets with meme attributes. A core reason why the on-chain meme trend has weakened this round is that the most appealing meme assets have actually already moved to the US stock market.

The stories these assets tell are still essentially about "changing the world." In the past, this narrative belonged to blockchain; now, a stronger version appears in US stocks, such as quantum computing, nuclear fusion, and SMRs. These things are often hard to explain solely through financial reports, cash flow, or DCF, and inherently carry strong meme attributes.

So, people who used to like chasing altcoins and meme coins can go chase these futuristic concepts in the US stock market; the logic is actually the same, and they won't necessarily be uncomfortable. Another group of people who originally looked at cash flow, fundamentals, and value support can also find corresponding value stocks and growth stocks in the US market.

So my point is, all the various styles within the crypto space actually have corresponding positions in the US stock market. Most people don't need to forcibly change their trading patterns; they can still find asset types they are familiar with.

If I really had to give one piece of advice, it would be: don't force yourself to change your methods just to switch markets. People who have survived until now usually have a set of survival methods they've validated themselves; continuing to stick with the effective parts is actually more important.

The 10/11 Event Severely Damaged Crypto Liquidity, Altcoin Rallies Hard to Recover

Maodi: Listening to your analysis just now, the picture that came to my mind is actually quite dramatic. It feels like the altcoin speculation of the past period seems to have completely ended, because those speculative targets can now almost all be found in the US stock market, and with even stronger real-world significance. Can it be understood this way?

didier: It can be understood that way.

The core reason why the altcoin trend has basically ended is that the liquidity in the crypto space has been too severely destroyed. The 10/11 event dealt a very heavy blow to the industry's vitality. What was reported on the surface was $19 billion in liquidations, but the actual figure is likely far more than that. Rumors circulating suggest $400-500 billion, which I think is actually closer to the real situation.

And it's important to note that what was lost here wasn't book market value, 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 actual circulating supply is much smaller than it appears. Under these circumstances, evaporating hundreds of billions of dollars in cash in a single day is a severe blow to the entire industry's sentiment and liquidity.

So I believe the 10/11 event was the last straw that broke the altcoin market's back.

As for why "meme assets" in the US stock market can still be speculated on, the reason is also very simple: because the US stock market is currently the most liquid market globally. When your own liquidity fails, you naturally shift towards markets with stronger liquidity.

From the US perspective, its support for Bitcoin and blockchain also has its own strategic considerations. The US version of the logic is to turn blockchain, on-chain markets, and CEXs into channels for US assets to attract funds and hot money globally. So its push for the US financial system to go on-chain is essentially also expanding the global financing and distribution capabilities of US assets.

Of course, this is just the US government's understanding and usage. Whether blockchain and the crypto world will ultimately be completely shaped by this kind of national will is another matter. A more realistic scenario might be that the on-chain world and sovereign states will exist in a complex relationship of cooperation, utilization, and mutual gaming for a long time to come.

But at least so far, this US approach is indeed gradually becoming a reality.

More Cautious on Macro for H2, but Still Bullish on AI and Web3 Long-Term

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 Warsh adopt next, and how would that affect the overall market?

didier: I think market uncertainty is rising going forward.

On one hand, the market has already risen quite a bit; on the other hand, there may be several mega-company IPOs coming up later, such as SpaceX, OpenAI, and Anthropic. The real pressure isn't just the liquidity drain from financing, but that once these trillion-dollar companies are quickly included in indices, institutions may be forced to sell other weighted stocks for rebalancing under limited liquidity conditions, which will put pressure on the market. So entering June, I will be more cautious.

Another key variable is the midterm elections. If the Democrats ultimately take both chambers, that could be bearish for both Web3 and AI, as they emphasize labor rights, regulation, and oversight more than allowing frontier technologies to continue expanding at high speed.

But from a fundamental perspective, I think the market may be underestimating AI's real boost to the economy. AI has already penetrated many areas, it's just that existing statistical methods may not fully reflect it, so in the long run, its enhancement of production efficiency is still very strong.

The real problem isn't just growth, but also distribution. If the distribution mechanism isn't adjusted well, we might see an extremely polarized situation in the future: a few people who can master AI earn most of the gains, while a large number of middle-class individuals are squeezed or even unemployed. In that case, although productivity increases, overall societal consumption capacity would actually decline, which 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 very critical. Things like an AI tax, I think, will likely be implemented within three to five years, because without new tax sources, many future social arrangements will lack a funding basis.

If I only look from the second half of this year to next year, I don’t want to draw any absolute conclusions. Short-term correction pressure is indeed increasing, and it may become more pronounced especially around the time of the SpaceX listing, but I think this is more like a correction rather than a definitive market top. As long as the capital expenditure of major companies continues, the overall trend is not over yet.

Looking further ahead, I remain bullish on AI, and also on the combination of AI and blockchain. In the future, enterprises will become increasingly automated internally, and a machine economy on-chain may also form between enterprises. This broad direction has not changed.

So I still believe blockchain and Web3 have great prospects, but the way to play will become more mature. The past phase of rushing in and profiting without thinking may already be over, and the future looks more like an era of industrialization and institutionalization.