A sudden shift in the macro outlook: Justin Sun and Li Yihua turn bearish on the Nasdaq and Bitcoin—is it time to “deflate” the AI bubble?
Recently, Li Yihua, founder of Liquid Capital, shared details on social media of an in-depth conversation he had with Justin Sun, founder of TRON. After an hour-long discussion, the two reached a striking consensus: they were broadly bearish on the Nasdaq and Bitcoin, and even bluntly remarked, “Selling all your AI stocks now might turn out to be the market’s all-time high in hindsight.”
Against the backdrop of the AI boom and crypto bull market that have surged ahead in recent years, these extremely defensive remarks quickly sparked widespread debate in the market.
I. The Bearish Case: Political Shifts, Turbulence Among Industry Leaders, and “Subprime-Style” Leverage
In his retrospective, Li Yihua said that after successfully selling near the top when Bitcoin was around $86,000, he had remained patient, waiting for an opportunity to buy the dip. However, dramatic changes in the external environment recently completely upended his previous trading framework. The two men’s core bearish arguments can be summed up in three main points:
The short-term ecosystem has been disrupted: Changes in the U.S. political landscape (a Democratic administration taking office), along with sudden turmoil involving a key figure in the tech world (the “Jensen Huang incident”), have damaged the previously stable short-term ecosystem for AI development. Uncertainty over policy expectations and changes involving a leading industry figure are undermining confidence in capital markets.
A serious disconnect between expectations and reality: Justin Sun noted that over the past few years, leading AI companies such as Nvidia had amassed enormous leverage and expanded in a “subprime-like” fashion, fueled by the market’s “limitless optimism about the AI trend.” However, the financial bubble has been inflating far faster than actual commercial revenue growth in the AI industry.
Contagion and systemic risk: The two warned that if anything were to rattle Nvidia or key tech companies owned by Elon Musk, the entire AI supply chain would face a painful process of “deleveraging and deflating the bubble.” U.S. stocks could then face a sustained and substantial correction, potentially even triggering a broader financial crisis in an extreme scenario. Bitcoin, which is highly correlated with U.S. stocks, would also be unlikely to escape unscathed.
II. A Neutral Perspective: How to Stay Rational Between “Crisis Warnings” and “Long-Term Trends”
Faced with prominent investors’ “sell everything” warning, ordinary investors should neither panic blindly nor dismiss it lightly. From an objective, neutral market perspective, this episode highlights at least three signals worth considering:
1. Beware of leverage and valuation bubbles—the underlying argument has merit
Financial cycles show that every technological revolution is inevitably accompanied by excessive investor enthusiasm in its early stages. Today, tech giants are spending enormous amounts on computing infrastructure (CapEx), while the real profitability of downstream applications is still ramping up. Justin Sun’s point that “revenue growth can’t keep pace with leverage expansion” does strike at a key vulnerability in the high valuations of tech stocks. Telling the market to “prepare for the worst” is, at its core, the kind of risk-management awareness mature investors should have near the peak of a cycle.
2. Distinguish the speaker’s position from objective facts
When interpreting comments from prominent market figures, it is essential to take their investment horizons and state of mind into account. Li Yihua acknowledged in his post that after “selling near the top at $86,000,” he had been left on the sidelines waiting to buy the dip. After successfully selling near a market peak and staying on the sidelines for a long time, investors are often more likely to notice and amplify bearish signals, confirming that their decision to sell everything was the right one. In addition, public statements from leaders in crypto and tech can sometimes reflect emotional venting or an attempt to manage expectations, and should not be treated as precise market-timing instructions.
3. A short-term “bubble deflation” does not disprove the long-term case
Looking back at the dot-com bubble of 2000, even though the Nasdaq suffered a 50% or deeper decline and countless highly leveraged companies collapsed, the fundamental idea that the internet would change the world was not disproven. On the contrary, once the bubble had burst, it paved the way for the emergence of genuine tech giants. Likewise, even if the AI sector and crypto markets undergo a painful bout of “deleveraging” over the next year or two, that would simply be a process of valuations returning to rational levels—not the end of technological progress.
III. Conclusion
The conversation between Justin Sun and Li Yihua is more like a warning bell for an overheated market: when everyone has grown accustomed to a narrative of one-way gains, shifts in macroeconomic and political conditions and the fragility of high leverage can become the most dangerous “gray rhinos.”
For today’s market participants, a more rational approach than either “going all in” or “selling everything” may be to reassess the composition of their portfolios—reduce excessive leverage and shed purely speculative assets unsupported by business performance, while respecting short-term macro volatility and maintaining enough cash flow and a margin of safety to preserve exposure to genuine long-term value.
Recently, Li Yihua, founder of Liquid Capital, shared details on social media of an in-depth conversation he had with Justin Sun, founder of TRON. After an hour-long discussion, the two reached a striking consensus: they were broadly bearish on the Nasdaq and Bitcoin, and even bluntly remarked, “Selling all your AI stocks now might turn out to be the market’s all-time high in hindsight.”
Against the backdrop of the AI boom and crypto bull market that have surged ahead in recent years, these extremely defensive remarks quickly sparked widespread debate in the market.
I. The Bearish Case: Political Shifts, Turbulence Among Industry Leaders, and “Subprime-Style” Leverage
In his retrospective, Li Yihua said that after successfully selling near the top when Bitcoin was around $86,000, he had remained patient, waiting for an opportunity to buy the dip. However, dramatic changes in the external environment recently completely upended his previous trading framework. The two men’s core bearish arguments can be summed up in three main points:
The short-term ecosystem has been disrupted: Changes in the U.S. political landscape (a Democratic administration taking office), along with sudden turmoil involving a key figure in the tech world (the “Jensen Huang incident”), have damaged the previously stable short-term ecosystem for AI development. Uncertainty over policy expectations and changes involving a leading industry figure are undermining confidence in capital markets.
A serious disconnect between expectations and reality: Justin Sun noted that over the past few years, leading AI companies such as Nvidia had amassed enormous leverage and expanded in a “subprime-like” fashion, fueled by the market’s “limitless optimism about the AI trend.” However, the financial bubble has been inflating far faster than actual commercial revenue growth in the AI industry.
Contagion and systemic risk: The two warned that if anything were to rattle Nvidia or key tech companies owned by Elon Musk, the entire AI supply chain would face a painful process of “deleveraging and deflating the bubble.” U.S. stocks could then face a sustained and substantial correction, potentially even triggering a broader financial crisis in an extreme scenario. Bitcoin, which is highly correlated with U.S. stocks, would also be unlikely to escape unscathed.
II. A Neutral Perspective: How to Stay Rational Between “Crisis Warnings” and “Long-Term Trends”
Faced with prominent investors’ “sell everything” warning, ordinary investors should neither panic blindly nor dismiss it lightly. From an objective, neutral market perspective, this episode highlights at least three signals worth considering:
1. Beware of leverage and valuation bubbles—the underlying argument has merit
Financial cycles show that every technological revolution is inevitably accompanied by excessive investor enthusiasm in its early stages. Today, tech giants are spending enormous amounts on computing infrastructure (CapEx), while the real profitability of downstream applications is still ramping up. Justin Sun’s point that “revenue growth can’t keep pace with leverage expansion” does strike at a key vulnerability in the high valuations of tech stocks. Telling the market to “prepare for the worst” is, at its core, the kind of risk-management awareness mature investors should have near the peak of a cycle.
2. Distinguish the speaker’s position from objective facts
When interpreting comments from prominent market figures, it is essential to take their investment horizons and state of mind into account. Li Yihua acknowledged in his post that after “selling near the top at $86,000,” he had been left on the sidelines waiting to buy the dip. After successfully selling near a market peak and staying on the sidelines for a long time, investors are often more likely to notice and amplify bearish signals, confirming that their decision to sell everything was the right one. In addition, public statements from leaders in crypto and tech can sometimes reflect emotional venting or an attempt to manage expectations, and should not be treated as precise market-timing instructions.
3. A short-term “bubble deflation” does not disprove the long-term case
Looking back at the dot-com bubble of 2000, even though the Nasdaq suffered a 50% or deeper decline and countless highly leveraged companies collapsed, the fundamental idea that the internet would change the world was not disproven. On the contrary, once the bubble had burst, it paved the way for the emergence of genuine tech giants. Likewise, even if the AI sector and crypto markets undergo a painful bout of “deleveraging” over the next year or two, that would simply be a process of valuations returning to rational levels—not the end of technological progress.
III. Conclusion
The conversation between Justin Sun and Li Yihua is more like a warning bell for an overheated market: when everyone has grown accustomed to a narrative of one-way gains, shifts in macroeconomic and political conditions and the fragility of high leverage can become the most dangerous “gray rhinos.”
For today’s market participants, a more rational approach than either “going all in” or “selling everything” may be to reassess the composition of their portfolios—reduce excessive leverage and shed purely speculative assets unsupported by business performance, while respecting short-term macro volatility and maintaining enough cash flow and a margin of safety to preserve exposure to genuine long-term value.