Tag Archives: why

Institutional flight, AI fears, and leverage unwind: Why crypto is crashing now

Institutional flight, AI fears, and leverage unwind: Why crypto is crashing now

The retreat in equities and corresponding climb in yields underscore a market bracing for a pivotal Federal Reserve decision, yet the true story unfolding beneath the surface lies not just in macroeconomic indicators but in the interwoven dynamics of institutional behaviour, leveraged positioning, and emerging technological risk.

As investors parse through weaker-than-expected manufacturing data and recalibrate their expectations for monetary policy, crypto markets have become a barometer of broader risk sentiment, a sentiment now defined by extreme caution, forced deleveraging, and a growing unease about the integrity of the very infrastructure underpinning digital finance.

US equities pulled back modestly, with the Dow shedding 0.9 per cent and the Nasdaq down 0.4 per cent, but the real pressure emerged from the cryptocurrency sector, which extended its weekly losses with another 0.5 per cent decline over the last 24 hours. This pullback occurred against the backdrop of US$3.48 billion in net outflows from US spot Bitcoin ETFs in November, the largest monthly redemption since February. BlackRock’s IBIT alone accounted for US$2.34 billion of that total, a stark signal of institutional risk aversion.

These outflows are not merely passive portfolio adjustments. They translate directly into selling pressure on Bitcoin’s spot market, as ETF issuers must liquidate BTC holdings to meet redemptions. In a market already sensitive to macro headwinds, this institutional exodus has acted as a powerful accelerant to downside momentum, reinforcing the correlation between traditional risk assets and crypto that has solidified over the past year.

Compounding this institutional pullback is a wave of forced deleveraging in the derivatives market. In just 24 hours, US$235 million in Bitcoin positions were liquidated, with an overwhelming 82 per cent of those coming from long positions. This long squeeze, which saw open interest decline by 2.5 per cent, reflects a classic feedback loop. Price declines trigger margin calls, which force leveraged traders to sell, which drives prices lower still. The result is a cascade that not only pushes Bitcoin below key technical levels, such as the critical 85,000 dollar psychological support, but drags the broader altcoin market down with it.

The volatility generated by this dynamic has deepened investor anxiety, pushing the Fear and Greed Index to a mere 16 out of 100, a reading firmly in extreme fear territory. Historically, such levels have often coincided with market bottoms, but the current environment presents a more complex picture due to structural shifts in market composition and new vectors of systemic risk.

Among those emerging risks is the spectre of AI-driven exploits in decentralised finance. Recent research from Anthropic demonstrated that AI agents, operating in simulated environments, could identify and exploit vulnerabilities in smart contracts to extract US$4.6 million in value. While these experiments occurred in sandboxed conditions and did not affect live protocols, the implications sent ripples through the crypto community. The fear is not that AI has already breached live systems, but that the automation of exploit discovery could drastically lower the barrier to entry for malicious actors.

Projects with unaudited or poorly vetted code, still distressingly common in the DeFi space, could become low-hanging fruit for increasingly sophisticated AI tools. This concern, though speculative in its immediate impact, contributes to a broader reassessment of risk in the sector, particularly among institutional participants who prioritise regulatory and security compliance. It adds another layer to the current bearish sentiment, not as a primary driver of price action but as a background anxiety that discourages fresh capital deployment.

Meanwhile, macro conditions continue to shape the investment landscape. The ISM Manufacturing PMI’s drop to a four-month low reinforces concerns that tariffs and global trade friction remain a drag on industrial activity. While this would typically bolster the case for Fed rate cuts, the simultaneous rise in US Treasury yields, with 10-year yields climbing to 4.096 per cent and two-year yields to 3.537 per cent, suggests markets are also pricing in a more resilient economic outlook for 2026. This duality creates tension.

Weaker near-term data support easing, but stronger forward expectations could limit the pace of cuts. In this context, the Fed’s anticipated 25 basis point cut in December appears increasingly certain, yet investors remain wary of overextending into risk assets ahead of the actual announcement.

Global currency markets reflect similar recalibration. The Japanese yen strengthened against the dollar as expectations for a December Bank of Japan rate hike returned to the fore, pushing 10-year JGB yields up by six basis points to 1.86 per cent.

This narrowing of the yield differential between US and Japanese debt supports further yen appreciation, which could influence capital flows into and out of Asian markets. In China, equities rose despite poor November PMI data, as investors bet on imminent fiscal or monetary stimulus, a classic bad news is good news reaction in a market starved for policy support. This divergence between fundamentals and sentiment underscores the fragile nature of the current rally in Chinese assets, which remains contingent on government intervention rather than organic growth.

In the commodities space, Brent crude rose one per cent to US$63.30 per barrel, remaining sensitive to geopolitical developments in the Middle East and to OPEC+ supply discipline. Gold, trading flat at US$2,340 per ounce, continues to serve as a defensive hedge, though its lack of momentum suggests investors are not yet rushing into traditional safe havens. Instead, capital appears to be moving toward quality fixed income, as UST spreads widen and bonds become more attractive ahead of expected Fed easing.

All these threads converge on a central question. Is the current pessimism in crypto markets a contrarian signal or the beginning of a deeper correction? The trifecta of ETF outflows, leveraged long unwinds, and AI-related security fears has created a perfect storm of negative sentiment. History suggests that extreme fear often marks exhaustion points.

The key variables to watch are whether Bitcoin can stabilise above US$85,000 and whether ETF flows reverse in December, particularly in light of Vanguard’s recent move to grant its clients access to crypto ETFs. This development could reignite institutional interest. If outflows slow or turn positive, and if macro conditions align with a dovish Fed pivot, the stage could be set for a relief rally.

Until then, the market remains caught between technical support, macro uncertainty, and the lingering shadow of new technological risks that challenge the foundational trust assumptions of decentralised systems.

 

Source: https://e27.co/institutional-flight-ai-fears-and-leverage-unwind-why-crypto-is-crashing-now-20251202/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

A House Of Cards Built On Bitcoin: Why Strategy Inc. Can’t Outrun Its 90-Day Clock

A House Of Cards Built On Bitcoin: Why Strategy Inc. Can’t Outrun Its 90-Day Clock

Let me begin by saying this. I have nothing against Bitcoin, but did see flaws in the treasury model. I have also voiced that out in an earlier article, too.

There is a certain seduction in the story of Strategy Inc., the company formerly known as MicroStrategy, that has bewitched investors, pundits, and even seasoned crypto natives for years. On the surface, it appears to be a grand corporate embrace of digital gold: a publicly traded entity hoarding Bitcoin not as a speculative side bet, but as a strategic treasury reserve. In a world drowning in fiat inflation and institutional timidity, Strategy Inc. seemed to offer a rare act of conviction, a bold bet on a post-fiat future. But look closer, and the illusion evaporates. The company reported just 54 million dollars in cash on hand, yet faces more than 640 million dollars in annual preferred dividend obligations. Its legacy software business, once the engine of its existence, remains cash-flow negative. There is no internal engine generating the capital needed to sustain its promises. Instead, Strategy Inc. has built a financial house of cards powered entirely by external capital markets, one that only functions so long as investors are willing to keep buying in.

And for a while, they did. From January through September 2025 alone, the company raised 19.5 billion dollars, not to buy more Bitcoin, but to refinance existing debt. This is not innovation. It is recursion. It is a system where new equity and debt issuances are used to pay dividends to prior investors. The only reason this did not feel like a Ponzi scheme was that Strategy’s stock consistently traded at a significant premium to its Bitcoin net asset value. At a 2x premium, every new share issuance effectively increased per-share Bitcoin ownership for existing holders, a virtuous loop that masked the underlying insolvency of the model. But that premium has now vanished. As of late 2025, Strategy trades roughly at par with its Bitcoin net asset value. The magic is gone. Issuing new shares no longer enriches existing shareholders. It dilutes them.

This shift is catastrophic for a model that depends entirely on perpetual capital inflows. Without a premium, there is no arbitrage advantage to issuing equity. Without equity issuance, there is no way to fund those monstrous preferred dividends, especially now that management has raised the dividend rate from 9.0 percent in July to a jaw-dropping 10.5 percent by November. This is not confidence. It is panic. The structure includes no cap on the dividend rate, meaning that every time the common share price dips below 100 dollars, the yield automatically ratchets higher to attract buyers. It is a feedback loop of compounding desperation: lower price, higher yield, greater capital burn, greater pressure on price. The math is accelerating toward a cliff.

The most immediate existential threat is not market sentiment or macro volatility. It is mechanical. On January 15, 2026, MSCI will implement a rule change excluding any company with more than 50 percent of its assets in digital currency from its indices. Strategy Inc. holds 77 percent of its balance sheet in Bitcoin. This is not a judgment call. It is a binary, algorithmic exclusion. JPMorgan estimates the delisting could force passive funds to dump 2.8 billion dollars in Strategy stock immediately. If other index providers follow suit, the total outflows could swell to 8.8 billion dollars. In a stock where 15 to 20 percent of its market cap is already tied to algorithmic strategies that trade on technicals rather than fundamentals, such a forced selloff could trigger a death spiral.

We got a preview of this vulnerability on October 10, 2025. In just 14 hours, Bitcoin dropped 17 percent, order book depth evaporated by 90 percent, and 19 billion dollars in leveraged positions were liquidated across the ecosystem. The event laid bare a fundamental truth: Bitcoin’s market, for all its headline size, remains structurally shallow. The notion that Strategy Inc. could offload 1 billion dollars of Bitcoin annually without moving the market is pure fantasy, shattered not by theory but by real-time data. If the company is forced to sell even 100,000 of its 649,870 coins to meet obligations, it would not just depress the price. It could ignite a systemic cascade, especially if leveraged players interpret the sale as a signal of institutional capitulation.

This is not a critique of Bitcoin, far from it. Bitcoin, as a decentralized, censorship-resistant, apolitical monetary network, remains as compelling as ever. It will likely outlive Strategy Inc., the Federal Reserve’s current chair, and possibly even the dollar’s global reserve status. The issue is not the asset. It is the attempt to graft Bitcoin’s infinite time horizon onto a corporate entity bound by quarterly earnings, SEC disclosures, and 90-day liquidity windows. Sovereign treasuries have operated for centuries. Corporations operate on credit cycles. You cannot run a company like a nation-state, especially when that company has no real operating income and is leveraged to the hilt on a volatile asset.

Strategy Inc.’s entire thesis rests on the assumption that capital markets will remain infinitely accommodating, that investors will always be there to buy newly issued shares or bonds to fund its preferred dividends. But markets are not infinite. They are cyclical, emotional, and brutally efficient at exposing leverage masquerading as strategy. The moment the premium disappeared, the model broke. The moment the index exclusion became inevitable, the countdown began.

We will know the outcome by March 2026. Either Strategy Inc. will be forced into a humiliating restructuring, slashing its preferred dividend, selling Bitcoin at a loss, and retreating into a shadow of its former self, or it will collapse entirely, taking with it the credibility of the entire corporate Bitcoin treasury narrative. Some will call it bad luck. Others will blame macro headwinds. But the truth is simpler: this was never sustainable. It was a high-risk financial structure dressed in the language of conviction, powered by recursive capital raises and investor FOMO.

The data is public. The mechanics are transparent. The outcome is not uncertain. It is mathematically inevitable. What remains is our collective willingness to finally see the 48 billion dollar illusion for what it is: not a visionary bet on Bitcoin, but a self-reinforcing error that mistook leverage for legacy, and market timing for strategy. In the end, Strategy Inc. will not be remembered as a pioneer of digital treasury management. It will be remembered as the cautionary tale of what happens when financial engineering masquerades as principle, and when a company confuses a bull market for a business model.

 

Additional Notes:

– Reduce digital assets to 49% to stay in the indices

– Sell short-term, hold long-term

– If the biggest treasury fails, the snowball sell effect

– If the biggest treasury fails, what about the rest of the treasuries

– Additional funding

 

 

Source: https://www.benzinga.com/Opinion/25/11/49059248/a-house-of-cards-built-on-bitcoin-why-strategy-inc-cant-outrun-its-90-day-clock

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Expert Says Shiba Inu Holders Deserve Nobel Prizes: Here’s Why

Expert Says Shiba Inu Holders Deserve Nobel Prizes: Here’s Why

Blockchain advisor Anndy Lian has criticized the growing hype around new meme-coin traders, arguing that long-term Shiba Inu holders deserve Nobel prizes.

In a recent tweet, Lian pushed back against a wave of social media praise directed at a trader who held a newly launched Solana meme coin through severe volatility.

He noted that the individual was being celebrated for showing “conviction” after holding a three-day-old token and suffering a $30,000 loss within just 24 hours.

Shiba Inu Holders Endured Extreme Volatility

Lian suggested that the development pales in comparison to the long-term commitment shown by investors in established meme coins, such as Shiba Inu and Dogecoin.

Indeed, Shiba Inu holders have experienced extreme volatility over the years, ranging from massive price surges to significant drawdowns.

Launched at an initial price of $0.000000000056 in August 2020, Shiba Inu climbed to an all-time high of $0.00008845 in October 2021. Ever since, the token has plummeted heavily, dropping 89.68% from its ATH to $0.000009122.

Meanwhile, amid the recent market downturn, Shiba Inu has plunged 5.47% over the past 24 hours to $0.000009122. It has posted a seven-day loss of 1.05%, a 13.94% decline over the past month, and a 56.4% drawdown this year alone.

Long-Term Shiba Inu Holders Deserve Nobel Awards

Although some traders liquidated their SHIB holdings, many others have remained resilient. As reported in May, over 1.17 million Shiba Inu holders had been holding SHIB for over a year, enduring significant volatility within this period.

In Lian’s view, true conviction is demonstrated by long-term investors who have held Shiba Inu through years of volatility, not by short-term speculators riding the overnight swings of newly minted Solana meme coins. He disclosed that he is among the investors who have held Shiba Inu for several years.

According to him, if enduring a $30,000 drawdown in 24 hours on a three-day-old Solana meme coin counts as conviction, then long-term Shiba Inu holders deserve Nobel prizes for enduring years of market swings.

He argues that recognition should go to Shiba Inu investors, who have weathered years of extreme volatility, rather than new traders who have only experienced a fraction of what the SHIB community has faced.

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j