Market Enters the True Liquidation Moment

TLDR
1. The market will end with a blowout of all leveraged longs
2. Funds are fleeing from US stocks and precious metals
3. Institutional hedging demand is extremely high, skew is severely left-leaning, and downside insurance becomes very expensive
4. All publicly held long positions will be challenged
5. The hot sectors in the market are only prediction markets and RWA
6. MSTR faces fundamental challenges, and other DATs are nearly bankrupt
7. The true hedge remains focused on original exposure hedging
8. The bottom range is beginning to form, and cycle traders can start positioning (MSTR cost basis around $66,000; current 200T mining rigs cost approximately $58,000–$60,000)
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1. The market will end with a blowout of all leveraged longs
All declines after 2017 have ended with a blowout of all leveraged longs.
This is related to liquidity.
When market makers (the role providing liquidity) see excessive selling pressure, they will also dilute market making and adopt defensive order placements.
That’s why declines often end with strong liquidations of open interest (OI).
Currently, OI has not been fully liquidated, so the bottom range may already be starting to form.
2. Funds are fleeing from US stocks and precious metals
This is not uncommon. Under the bubble of US stocks, amid geopolitical uncertainties and Fed chair changes, institutions will proactively hedge or take profits on their risk exposure.
At the same time, US stock profits are already substantial.
Precious metals also reflect rising safe-haven demand. During the silver doubling rally, the silver market experienced abnormal development.
This is directly related to previous institutional demands to increase the premium (margin) for silver.
Institutions took preventive measures against rapid growth (increasing premiums can also lead to large liquidations in silver futures, reducing risk).
3. Currently, next-day and weekly Bitcoin options skew are severely left-leaning
Next-day 15 delta even reaches -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 is entering a panic bear phase and are also fearful of weekends when markets are closed.
With negative skew and negative GEX, market makers often short gamma; as the market declines, their delta becomes more negative, requiring them to sell more underlying assets to maintain delta neutrality, which directly amplifies the decline and accelerates the trend.
Especially when approaching the Gamma Wall, market makers increase selling pressure to avoid being exercised.
If GEX is positive, they buy dips to hedge, stabilizing the market. Negative skew often pushes GEX into negative territory, increasing downside risk.
Top tech stocks have positive GEX and solid fundamentals, so their performance tends to outperform the crypto market (e.g., Nasdaq down 10%, while BTC drops 30%).
4. When negative news becomes clear, the market will seek breakout levels to acquire liquidity for profit, which is related to the liquidity scarcity in crypto markets.
When markets turn bearish, buying pressure becomes highly compressed.
This makes the market vulnerable to short squeezes.
In this context, all exposed long risk positions become targets for liquidity capture.
K-line movements will be closely related to rapid liquidity acquisition.
Two key levels to watch:
MSTR’s cost basis around $63,000
200T mining rigs costing about $58,000–$60,000
5. Based on current crypto market financing conditions
AI prediction markets and RWA remain major directions where VCs seek opportunities in crypto, which could also be where retail investors find alpha.
As for previous projects like Layer 2, public chains, GameFi, SocialFi—
The challenge is their overall cash flow, market making, and marketing professionalism.
This will be a significant challenge.
6. MSTR faces fundamental challenges, and DATs are nearly bankrupt
NAV typically refers to the market value of a company’s Bitcoin holdings, used to evaluate the valuation of the Strategy relative to its BTC assets.
Simple formula:
Bitcoin NAV = Number of Bitcoins held × Current Bitcoin price
Currently, MSTR’s NAV is 713,502 BTC, with an average cost basis of $66,044, so Bitcoin NAV ≈ 713,502 × 66,044 ≈ $4.71 billion.
mNAV measures the enterprise value relative to its Bitcoin NAV, often used to determine if a stock is trading at a premium (mNAV > 1 indicates a premium).
Formula:
mNAV = Enterprise Value ( / Bitcoin NAV
Enterprise Value ) (EV) is calculated as:
EV = Market cap (including all common shares) + Total debt – Cash and cash equivalents. Sometimes adjusted for preferred stock or convertible bonds to reflect complex capital structures.
Market cap = Share price × Shares outstanding = 106.99 × 289,340,000 ≈ $30.96 billion
EV = 30.96 billion + 822 million – 5.4 million ≈ $3.9126 billion
mNAV = 3.9126 billion / 4.71 billion ≈ 0.832 (about 17% discount; mNAV < 1 indicates the stock is trading at a discount relative to BTC assets, influenced by market sentiment and BTC price declines)
7. Meanwhile, MSTR’s premium arbitrage will also disappear, meaning the position becomes lighter.
From recent collapses in precious metals, US stocks, and crypto markets, the real hedge remains holding original exposure rather than diversified assets.
This naturally raises concerns—everyone seems to be actively raising cash to prepare for potential liquidity crises.
In plain terms, people believe the likelihood of a market crisis is increasing. When liquidity dries up, cash is king.
8. The bottom range is beginning to form, and cycle traders can start positioning (MSTR cost basis around $66,000; current 200T mining rigs cost approximately $58,000–$60,000)
Based on the 200T machine at $0.06 per unit, the shutdown cost for mining rigs will be around $58,000–$60,000.
This is the final turning point and the key level for cycle traders.
As a large holder of Bitcoin that is unlikely to be liquidated—only facing fundraising and premium risks—MSTR’s cost basis will also become a target price in the market.
(If interested, I can write a separate article to discuss this further)