TLDR:
The market will end by blowing up all leveraged long positions
US stocks and precious metals are all fleeing
Institutional hedging demand is extremely high, with a severe left skew; the insurance against declines has become extremely expensive
All open long positions will be challenged
The popular tracks in the market are only prediction markets and RWA
MSTR is facing fundamental challenges, while other DATs are nearly bankrupt
True hedging still relies on hedging against the original exposure
Bottom range is starting to form; cycle traders can position (MSTR $76,000 cost, current 200T mining machine cost about $58,000-$60,000)
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The market will end by blowing up all leveraged long positions
All declines after 2017 ended with the liquidation of all leveraged longs.
This is related to liquidity
When market makers (those providing liquidity) find excessive selling pressure in the market, they will also dilute market making and adopt defensive orders
This is why declines are often the strong liquidation of OI ending.
The current OI has not been fully liquidated, and the bottom range may have already started to form.
2. US stocks and precious metals are fleeing
This is actually not uncommon; under the high bubble of US stocks, during geopolitical uncertainty and the transition of the Federal Reserve chairman, institutions will also take the lead in hedging or taking profits on their risk exposures.
Meanwhile, the current profits in the US stock market are already huge
Precious metals correspond to a rise in safe-haven demand, and in the surge of silver doubling, the silver market has shown abnormal development.
This is directly related to the previous request from institutions to increase the premium (margin) ratio for silver. Institutions have taken some preventive measures against rapid growth. (Increasing the premium will also directly lead to a massive liquidation in the silver futures market, thereby reducing risk)
3. Currently, the skew of Bitcoin options for the next day and this week is severely left-leaning
The next day's 15 delta is even -40, and institutions are in a real defensive dilemma.
When the market enters panic, insurance against market declines becomes very expensive.
Institutions judge that the market has entered a panic bear market and express panic about the weekends of non-trading days.
In the case of negative skew and negative GEX, market makers often short gamma; when the market goes down, their delta becomes more negative, needing to sell more underlying assets to maintain delta neutrality, which will also directly amplify declines and accelerate trends.
Especially as the market approaches the Gamma Wall, market makers will increase selling pressure to avoid exercising options.
If GEX is positive, they will buy on the dip to hedge, thereby stabilizing the market. Negative skew often pushes towards negative GEX, increasing downside risk.
The GEX of major tech stocks is positive, and the overall fundamentals provide some support, so the performance of tech stocks is significantly better than that of the crypto market. (Nasdaq fell 10%, while BTC fell 30%)
4. When the bearish signals are clear, the market will look for breakout positions to gain liquidity for profit, which is related to the scarce liquidity in the crypto market. When the market is bearish, buying pressure will be significantly compressed.
This leads to the market becoming a vulnerable one that is easy for bears to target.
In this context, all long risk exposures in the market will become targets for liquidity acquisition. The movement of K-lines will be related to quickly obtaining liquidity.
Here, two key positions can be mentioned
The cost of MSTR is about $63,000
The cost of a 200T mining machine at $0.06 is about $58,000-60,000
5. From the current financing situation,
AI predicting the market, RWA remains one of the major directions for VCs seeking opportunities in the crypto market, which may also be where retail investors can achieve alpha returns.
As for previous projects, such as Layer 2, public chains, gamefi, socialfi
What is being tested is their overall cash flow, the professionalism of market making and marketing
This will be a significant challenge
6. MSTR is facing fundamental challenges, and DAT is almost bankrupt
NAV usually refers to the market value of the company's Bitcoin holdings, commonly used to evaluate the pricing of the Strategy relative to its BTC assets. The simple formula is:
Bitcoin NAV = Amount of Bitcoin held × Current Bitcoin price
Currently, MSTR's NAV is 713,502 BTC, with a comprehensive cost of $66,044, so Bitcoin NAV ≈ 713,502 × 66,044 ≈ $4.71 billion.
mNAV measures the multiple of the Strategy's enterprise value relative to its Bitcoin NAV, commonly used to judge whether stocks are trading at a premium (mNAV > 1 indicates a premium). The formula is:
mNAV = Enterprise Value (EV) / Bitcoin NAV
Calculation of Enterprise Value (EV): EV = Market capitalization (including all common shares) + Total debt - Cash and cash equivalents. Sometimes adjusted to include preferred stock or convertible bonds to reflect the complex capital structure of the Strategy.
Market capitalization = Stock price × Shares outstanding = 106.99 × 289,340,000 ≈ 30,960,446,600 (approximately $3.096 billion)
EV = Market capitalization + Total debt - Cash and equivalents = $3.096 billion + $822 million - $0.054 million ≈ $3.9126 billion
mNAV = 39.126 / 47.04 ≈ 0.832 (indicating about 17% discount; mNAV < 1 means the stock is trading at a discount relative to BTC assets, possibly affected by market sentiment and the decline of BTC)
At the same time, MSTR's premium arbitrage will also disappear, which means the car has become lighter.
7. From the perspective of the recent collapse of precious metals, the US stock market, and the crypto market, true hedging is still about holding one's own exposure rather than using diversified assets as the primary hedging method.
This inevitably raises concerns, as it seems everyone is intentionally recalling cash to cope with potential future liquidity squeeze risks.
In plain language, it means that people believe the likelihood of a market crisis is increasing, and during liquidity squeezes, cash is king.
8. The bottom range is starting to form, and cycle traders can position themselves (MSTR cost $66,000; currently, the cost of a 200T mining machine is about $58,000-60,000)
Based on the cost of 0.06U for a 200T machine, the shutdown cost of the mining machine will appear at 58000-60000, which is the final position for turnover and also a key position for cycle traders.
MSTR, as a large holder of BTC that will not be liquidated and only faces fundraising and premium risks, their cost will also become the target price for the market. (If interested, I can write another article to discuss this separately)