Will the Ethereum treasury company face a crisis?

- There are now a large number of Ethereum treasury companies with mNAV below 1. Is there a possibility that these companies will face a collapse in this bear market, leading to a cascading sell-off?

Is there a possibility of a collapse? I do think there is a possibility, but whether it actually happens is uncertain.

What I care more about is: if this possibility really occurs, what should we, as participants, do?

My approach is simple: if Ethereum drops to $2500, I will continue to dollar-cost average. Once you think this through, you don't need to be too entangled with whether it will collapse or not.

As I wrote in my article yesterday, I neither hate nor like these companies. Most of them (except for MicroStrategy, I suppose) are a bunch of gamblers; after all, they are using investors' money, and if they lose, they are not responsible, but if they win, it’s their credit. Therefore, I have always viewed them with a critical and cautious eye.

In fact, it's not just these treasury companies; many Wall Street financial institutions that have been loudly proclaiming the value of Bitcoin and Ethereum in this market cycle have also started to take frequent actions recently.

For example, BlackRock has been monitored selling off its Bitcoin and Ethereum holdings in recent days. They call it balancing their positions, but in my view, it’s driven by speculative psychology, unable to resist the temptation to buy high and sell low.

But if we look at the views they were confidently expressing at the beginning of this year or even last year: they were adamant that Bitcoin and Ethereum could reach XXXX dollars in the coming XXX years.

So even if they hold onto these assets without selling at the current price, when they reach the price they were shouting about in the future, the annualized returns from Bitcoin and Ethereum would far exceed the average annualized returns of many so-called quality assets.

Since they already have such a good asset in hand, why sell now?

It’s just that under the temptation of short-term profits, they immediately forget the long-term benefits they themselves have talked about.

- Do the S&P 500 and Nasdaq 100 still have potential in the future?

That depends on how long "the future" is. If "the future" refers to 20 or even 30 years, I think there is still potential, but if "the future" refers to the next two to five years, I can't make a judgment.

Regarding the indices of the US stock market, I have shared my views in previous articles:

I sold all my indices early on because I really couldn't understand their valuations, leaving only a few companies I like.

In the current situation, I am not participating in either the indices or the companies.

As for the current state of the US stock market, particularly in the AI ecosystem, there have always been two opposing opinions: there is a bubble and there is no bubble.

I think it still depends on the real performance support and how long the existing performance can be sustained.

In the past, I speculated that the path to a bubble in the AI ecosystem might be: first, the stocks of infrastructure soar, then extend to the stocks of application fields, until at some stage it is discovered that the application field cannot realize value, and even the infrastructure is overvalued, leading to a bubble burst.

However, two recent phenomena are worth noting because they reflect a development path that is somewhat different from what I imagined.

One is that the CEO of Microsoft recently said that the GPUs they have hoarded are piling up in warehouses and cannot be used due to insufficient power facilities.

The other is the recent sharp decline in Duolingo's stock.

GPUs and power are both the infrastructure of AI.

The phenomenon reflected by Microsoft indicates that even in the infrastructure sector, certain bottlenecks (such as power) may lead to the idleness of other infrastructures (such as GPUs). I estimate that this phenomenon may extend to other fields in the future. If this phenomenon continues to occur, will it itself trigger concerns about the performance of (for example, Nvidia) in the infrastructure sector?

Duolingo is an English teaching software that is considered an application case of AI in the industry. Recently, its stock plummeted due to certain aspects of its performance falling short of expectations. This sharp decline is viewed as a sign of AI applications not meeting expectations.

I originally guessed that this expectation would come later, but I didn't expect it to appear now. Whether this expectation will further spread depends on the performance of other related companies in the future.

In short, as the AI ecosystem has developed to this point, the accumulated uncertainty is also increasing, so I am currently observing these stocks in the US market and basically not making any moves.