Crypto Experts Roundtable Discussion: Is the Market Downturn Signaling a Bull-Bear Reversal?

Editing | Wu Talks Blockchain

This episode features a roundtable discussion on Hong Kong and Mainland China policies at the Finternet 2025 Asia Digital Financial Summit. The participants include Wu Talks Blockchain founder Colin Wu, OSL Group Executive Director and CEO Kevin Cui, Huaxing Capital Senior Advisor Pan Zhiyong, and Xinhuo Technology Executive Director and CEO Livio Weng.

The guests delved into how policy changes in Hong Kong and Mainland China impact the Web3 industry, especially the market performance of innovative financial tools like Bitcoin, stablecoins, and DAT (Digital Asset Treasury). They analyzed whether the current market is at a turning point from a bull to a bear market, and discussed the prospects and challenges for DAT amid Bitcoin and US stock price fluctuations, regulatory restrictions on stablecoins, and other factors. The guests also shared insights on the differing policy directions in Hong Kong and Mainland China, highlighting Hong Kong’s gradual regulatory relaxation and efforts to promote financial innovation.

Is the market at a bull-bear turning point?

Colin: The market is indeed at what many consider a potential turning point. For example, yesterday, the co-founder of AllianceDAO mentioned that most traders and institutions around him are turning bearish. In the past 12 hours, there has been a noticeable decline. People are wondering whether this signals a shift from a bull to a bear market, or if it’s just a short-term dip that will eventually lead back to a bull run.

Kevin: First, let me clarify that this is not financial advice. I personally haven’t traded derivatives for a long time. If you’re dealing with leverage products, you need to be cautious. We often say “Cherish life, stay away from derivatives.” Looking at the market trend, I personally see no signs of a transition from a bull to a bear market. If Bitcoin drops below $100,000, I see that as a buying opportunity. From a long-term perspective, the overall growth trend hasn’t changed. That’s my personal view.

Patrick: My view is that this cycle has been very volatile. Bitcoin is generally seen as the market’s barometer, and the market tends to follow Bitcoin’s cycle. Typically, there’s a four-year cycle, often summarized as “one bull, three bears,” meaning one year of bull market and three years of bear markets within a four-year span. But I think the current cycle might be different. Due to policies under the Trump administration, like the “Genius Act,” I believe the overall market cycle could be more balanced—perhaps two bullish years and two bearish years, rather than the traditional “one bull, three bears.”

So, I think we are in the mid-phase of a bull market. We’re neither at the peak nor at the bottom. Investors are more cautious now. The key point is not to chase highs; a correction could be a very good entry point. That’s my assessment of the market.

Livio: We share a similar view that the market has not fully entered a bear phase, nor has the bull market ended. It’s more likely that after a rapid rise, the market needs to pause and consolidate. From a macro perspective, the total amount of stablecoins continues to grow, and major institutions like sovereign funds and listed companies are buying in. The Fed’s rate cuts are ongoing, and macro conditions aren’t too bad—US stocks and gold are performing well.

However, the crypto industry still faces issues. First, the recent turbulence caused rapid price increases—Ethereum went from over $1,000 to nearly $5,000. Such sharp rises cause early investors to take profits, which is inevitable; markets don’t go up forever.

Additionally, the industry has been impacted significantly. The recent crash reduced overall positions and liquidity, with core institutions facing withdrawals, directly affecting market liquidity. There have been incidents like the Balancer hack and issues with Stream, which harm industry health. Also, on-chain whale traders frequently manipulate prices, and political interference has influenced market trends.

These factors make smart money hesitant. Many worry about political manipulation and potential market crashes, which shake confidence. However, recent data shows the fear and greed index has fallen to around 20, indicating excessive panic. This could present a healthy buying opportunity for smart investors. So, fear and greed coexist, and extreme market emotions sometimes create rebound opportunities. As Patrick mentioned earlier, the market still has room to recover, but it needs time to adjust.

Returning to Patrick’s point, this doesn’t necessarily mean the bull-bear cycle has shifted. Future bull and bear markets might break traditional patterns. Historically, these cycles were driven by Bitcoin halving events, but their influence is waning. The involvement of traditional capital has added complexity, making future cycles less clear-cut. The characteristics of bull and bear markets may become more blurred.

Overall, I believe the current market isn’t overly pessimistic.

Excessive Hype on DAT and Market Cooling

Colin: Next, let’s discuss DAT, which many are paying close attention to. Every Monday, Tom Lee’s Bitmine continues heavy buying, yet Ethereum’s price keeps falling. Could Bitmine become the next MicroStrategy?

All three of you have companies involved in DAT-related businesses. Currently, there’s a lot of discussion about DAT, and regulators’ responses vary. Even Tom Lee has said DAT might be on the verge of collapse—though he’s known for being quite outspoken. What’s your view on the current stage of DAT? After a period of frenzy, does it still hold significant opportunities, or has it entered a phase of natural淘汰?

Livio: Regarding DAT, I think we should look at it from two angles. First, DAT was indeed overhyped in its early stage. When the market cooled, many saw their previous hot money get liquidated, raising doubts. But fundamentally, DAT remains an important industry improvement.

Initially, from 2013 to 2017/2018, buying crypto was only possible through exchanges, which had high barriers. Trust was required, and access often involved VPNs, making capital entry difficult.

In recent years, ETFs have made it easier for traditional capital to enter. Although many funds don’t see ETFs as tradable instruments, large funds and traditional investors have been buying stocks as a proxy for crypto or using them as a lightweight way to gain exposure. This provides a better channel for traditional investors.

As Xiao Feng (Chairman of Wanxiang Blockchain) once said, ETFs are good, but DAT is better—it can play a more significant role, especially as companies like MicroStrategy have demonstrated. We are now in a validation phase. During strong market conditions, many DATs’ market NAV (Net Asset Value) can reach two or three times their price, showing a premium. But in downturns, we need to watch for risks of collapse. If DAT can withstand this correction, and the market recovers, it will likely maintain a good premium, proving its business model.

Recently, we can observe whether top DATs’ NAV drops significantly below 1. If not, their business models are resilient, and opportunities will emerge. Smaller, illiquid DATs may struggle to survive. So, if you’re considering investing in DAT, it’s better to choose leading ones.

Patrick: I’ll briefly share my thoughts. I see DAT as a very important financial innovation. Compared to directly holding tokens or buying ETFs, DAT offers more active management flexibility. Despite some challenges, especially operational complexity, the key concern is whether the NAV will fall below 1. If a company’s market cap is below its NAV, where is the value?

In my view, a long-term NAV above 1 is unlikely to be sustained. If it stays at 2 or 3 for too long, that’s unrealistic. Over time, NAV should revert to a reasonable premium—around 30-50%. Maintaining this range indicates a healthy market.

For example, MicroStrategy’s ability to sustain a 30-50% premium suggests potential. DAT has gone through phases:

• Phase 1: MicroStrategy as a 1.0 version—simple funds that buy Bitcoin, especially when others don’t, making it very bullish.

• Phase 2: The 2.0 era—supported by Tom Lee’s backing of projects like Solana and Ethereum-based DATs. These incorporate staking, yield, and passive income, making their operations more attractive.

This approach differs from Bitcoin’s direct investment, as passive income can cover operational costs, including legal and audit expenses, without needing to sell assets. Companies like Tom Lee’s have successfully raised funds on NASDAQ.

However, NAV has been declining, sometimes below 1, which is a strategic move to prevent latecomers from entering the 2.0 stage. To progress further, DAT needs more innovation beyond staking and yield—new business models are essential. Otherwise, it remains just a fund. Once Ethereum staking matures, competition will intensify.

I believe DAT should evolve into a 3.0 or 2.0 Plus version, adding new revenue streams beyond passive income and staking to stay competitive. Overall, I agree with Livio that only top-tier companies will survive. To do so, they need new business models; relying solely on buying tokens and staking will likely lead to a valuation premium shrinking back to 10-30%, below the net asset value of holding tokens directly.

Kevin: I agree. DAT is an innovative financial instrument. Compared to ETFs based on cryptocurrencies, DAT offers more active management flexibility, including financing and operational agility. This makes it especially appealing for companies restricted by policies from directly holding cryptocurrencies or seeking safer custody options.

I believe DAT will have demand in the market. As a financial product, it has pros and cons. Good management is crucial; investors must understand what they’re valuing. Different DATs have different underlying assets and operational models, which are important considerations.

I also agree with Patrik and Livio that ultimately, there will be a “20-80 effect”: only a few well-managed, high-quality companies will succeed. We may see more issues in the future, such as scams. Transparency in DAT companies, especially in custody and operations, will likely become a key industry trend.

Hong Kong and Mainland China policies’ impact on Web3 industry

Colin: Next, let’s discuss recent policy developments. Over the past six months, policies in Hong Kong and Mainland China have changed significantly. Hong Kong’s policies are relatively stable, progressing gradually, with new regulations introduced annually based on strategic plans, including some relaxed measures announced yesterday.

In contrast, Mainland China’s policies over the past six months have been “polarized”—extreme swings that have, to some extent, affected Hong Kong’s environment. Personally, I observe that almost all state-owned enterprises and banks in Mainland China have started forming teams focused on stablecoins—researching, applying, recruiting, and collaborating. The enthusiasm was unprecedented. But overnight, regulators may have issued directives to these companies, halting activities instantly. Now, the atmosphere has become somewhat “overreactive,” and discussions around stablecoins have become cautious or even taboo.

On the other hand, Hong Kong’s overall policy direction, including legislation and regulations, remains steady and pragmatic. Although some may feel progress is slow, we see steady advances each year. This is optimistic. The next question is: what are your views on recent policy shifts, especially your predictions for the next six months to a year in Hong Kong and Mainland China? Let’s start with Kevin.

Kevin: Regarding Mainland China, I won’t comment much. But from Hong Kong’s perspective, policies are becoming more open and receptive to international trends. This is very positive for companies based in Hong Kong, especially those providing services internationally. The recent release of the Liquidity Sharing Order Department policy will improve liquidity for all Hong Kong clients, which is very beneficial for the local financial market. Overall, as the world’s third-largest financial center, Hong Kong’s gradual policy openness benefits the entire industry. While regulation may not be overly aggressive, we see positive steps each year, which is encouraging.

Patrick: My outlook is that the central government has clearly designated Hong Kong as a key policy hub for the crypto industry. First, Hong Kong has obtained licensing authority for VATP, started stablecoin pilots last year, and may announce the first batch of stablecoins this year. Next year, more licenses like VAOTC could be granted. This indicates that the central government recognizes Hong Kong as a major crypto policy center in Greater China and globally.

Furthermore, policies on stablecoins and RWA (Real-World Assets) have seen active participation from state-owned enterprises, banks, and internet companies. This demonstrates strong policy support. In the short term, I expect Hong Kong’s policies to focus on facilitating stablecoin pilots and liquidity support, which probably won’t change. Overall, Hong Kong’s positioning and policy push—especially within the crypto ecosystem—are unlikely to shift significantly.

As for Mainland China, I believe it’s unlikely to open up to crypto in the near term. But for companies operating in Hong Kong, it remains the best place. Whether through RWA or tokenization, Hong Kong offers a favorable environment for crypto development.

Livio: I agree. This year has seen a rare reversal—from highly open policies to tighter controls. Similar situations occurred in 2017, with licensing rumors circulating.

Colin: That time, the rumor was about licensing exchanges like Huobi, right?

Livio: Yes. Over time, as events unfolded, understanding of this new industry became more complex, and risks increased. Mainland China’s situation is particularly complicated. For example, mid-year discussions on stablecoins were very active, with many financial institutions eager to participate. But at the same time, some groups, claiming “state support,” launched various tokens promising huge returns—hundreds or thousands of times gains. Many investors were scammed.

The government saw that these illegal activities exploited crypto concepts to deceive new investors, leading to policy clampdowns. Looking back at 2017, the restrictions weren’t about denying Bitcoin or Ethereum’s value but about addressing chaos and scams. At that time, thousands of IEOs and ICOs emerged, with many teams raising funds based on simple presentations—similar to the P2P lending boom. This was due to the complex national context and varying levels of financial literacy, resulting in scams and fraud.

That’s why the government chose to let Hong Kong serve as a testing ground. Over the past three years, especially from 2022 to 2025, Hong Kong has been exploring the right policy path. Industry observations show that Hong Kong’s government has been experimenting, but recent measures—like opening up the licensing of Category 7 exchanges without the previous 12-month restrictions and enabling global liquidity connectivity—indicate a policy acceleration toward industry openness.

Hong Kong’s regulation of the Web3 sector has been quite effective. While regulating a rapidly evolving industry is inherently challenging, Hong Kong’s steady policy implementation offers hope. We’ve seen similar challenges in Japan, Singapore, and the US—how to regulate effectively without overreach. Although some criticize Hong Kong’s pace, the policies are being implemented, and Hong Kong has shifted from “testing the waters” to gradually building regulatory confidence. The government is balancing industry health with appropriate openness.

In the next three years, Hong Kong’s policies will mature further, especially in regulation and industry development. Like a child learning to walk before running, Hong Kong’s crypto ecosystem will enter a more mature phase, with faster industry growth.

Colin: Thank you all very much. I appreciate everyone’s participation today. Let’s work together to promote the development of Hong Kong and the Chinese-speaking Web3 industry, and continue to grow this community.