There are two main scenarios in markets and they could be classified as market-led and product-led. In a market-led scenario, everyone understands clearly that there is a need in the market to provide a product or service to fix a specific problem for customers. A good example was during the pandemic when the market was asking for a covid vaccine. Yes, the market was ripe for vaccines and the government would pay for vaccines.

In a product-led scenario, you have “products” built with no clear readily available market for them. In other words, the playbook is to introduce the “product” and then hope for the customers to come. Think of when Facebook launched VR sets, and then expected for customers to line up for them. That did not happen.

That product-led scenario is like seeing a door staged like an entrance to a restroom with companies lining up to compete to enter the door for economic liberation. Unfortunately, the door does not lead to anything because there is no market at the other side. Simply, companies are competing for a market that does not exist, wasting and destroying value along the line.

This is the reason some zen-masters will ask builders to check first before building. And that means, shake the door to know if there is really something (customers) behind before you even get to the market-door!

MicroStrategy has reported an unrealized loss of $5.91 billion on its digital assets for the first quarter of 2025, as disclosed in a filing with the U.S. Securities and Exchange Commission on April 7, 2025. This significant loss is primarily tied to its Bitcoin holdings, reflecting a sharp decline in the cryptocurrency’s market value during the quarter. Despite this paper loss, the company noted a $1.69 billion income tax benefit that partially offsets the impact, though it still expects a net loss for Q1. MicroStrategy, which has positioned itself as a major corporate holder of Bitcoin, did not purchase additional Bitcoin in the last week of the quarter (March 31 to April 6), amid heightened market volatility.

This unrealized loss highlights the risks of its aggressive Bitcoin accumulation strategy, especially as macroeconomic factors, such as U.S. tariff policies, have pressured risk-on assets like cryptocurrencies. MicroStrategy’s $5.91 billion unrealized loss on its digital assets in Q1 2025 stems primarily from a steep decline in Bitcoin’s market value during that period. Bitcoin and other cryptocurrencies are notoriously volatile, and Q1 2025 appears to have been a particularly rough period. Macroeconomic pressures, such as rising interest rates, inflation concerns, or shifts in investor sentiment away from risk-on assets, could have triggered a sell-off.

Reports from early April 2025 suggest that proposed or implemented U.S. tariffs under the incoming administration (set to take office later in 2025) rattled markets. Tariffs can dampen economic growth prospects, reduce risk appetite, and disproportionately affect speculative assets like Bitcoin, leading to price drops. MicroStrategy paused its Bitcoin purchases in the final week of Q1 which may have left its holdings exposed without additional support to offset falling prices. The company’s strategy of consistently buying Bitcoin, often regardless of price, didn’t provide a buffer against the downturn this time.

If other major holders or institutions also reduced exposure to digital assets, or if regulatory uncertainty intensified, this could have amplified the downward pressure on Bitcoin’s price, directly impacting MicroStrategy’s portfolio. Since the loss is “unrealized,” it reflects the difference between the current market value of MicroStrategy’s Bitcoin (as of March 31, 2025) and the cost basis of its purchases, which total $14.03 billion for 402,902 BTC. This implies an average purchase price of around $34,850 per BTC, while the market price likely fell well below that by quarter-end.

The massive unrealized loss carries significant implications for MicroStrategy, its investors, and the broader crypto market; While the loss is unrealized (meaning the Bitcoin hasn’t been sold), it still affects MicroStrategy’s balance sheet and could spook investors. The company reported a $1.69 billion income tax benefit, softening the blow, but a projected net loss for Q1 could erode confidence in its Bitcoin-centric strategy. MicroStrategy’s stock (MSTR) is closely tied to Bitcoin’s performance. A sharp BTC price drop likely dragged MSTR lower, especially since the company has used debt and equity offerings to fund its Bitcoin buys. Investors may question the sustainability of this approach if losses mount.

CEO Michael Saylor has championed Bitcoin as a corporate treasury asset, but a $5.91 billion paper loss might force a rethink. If the market doesn’t rebound, MicroStrategy could face pressure to sell some holdings—realizing losses—or scale back its aggressive accumulation, potentially signaling a shift in corporate crypto adoption trends. As a high-profile Bitcoin holder, MicroStrategy’s struggles could dampen enthusiasm in the crypto space. It might reinforce narratives that Bitcoin is too risky for institutional portfolios, slowing mainstream adoption, especially if other firms report similar losses.

On the flip side, if Bitcoin’s price recovers later in 2025, these unrealized losses could shrink or turn into gains, vindicating Saylor’s long-term bet. The company’s ability to weather this storm depends on its cash reserves, debt management, and market conditions. In short, the loss was fueled by a Bitcoin price crash, likely exacerbated by macroeconomic headwinds like U.S. tariffs and market dynamics. It puts MicroStrategy’s bold strategy under scrutiny, with implications ranging from stock volatility to broader questions about Bitcoin’s role in corporate finance. The next few quarters will be critical in determining whether this is a temporary setback or a deeper flaw in their approach.

The Chinese Yuan has weakened significantly, reaching its lowest level against the U.S. Dollar in over two years. This decline is largely attributed to a combination of factors, including escalating trade tensions with the United States, particularly following tariff threats, and a deliberate move by China’s central bank, the People’s Bank of China (PBOC), to set the yuan’s midpoint rate at its weakest since September 2023. For instance, on April 8, 2025, the PBOC set the reference rate at 7.2038 per dollar, allowing the onshore yuan to drop to around 7.33 and the offshore yuan to hit levels as low as 7.3677 before stabilizing slightly.

This marks a notable depreciation, with the currency losing about 1% against the dollar in April alone, reflecting pressures from U.S. trade policies and a strengthening dollar amid rising U.S. bond yields. Analysts suggest this could be a strategic move by China to bolster exports in response to economic challenges, though it raises concerns about potential capital flight and inflation. The Chinese yuan hitting its lowest level in two years carries several significant implications across economic, political, and global trade dimensions.

A weaker yuan makes Chinese goods cheaper on the global market, potentially increasing export competitiveness. This could help offset the impact of U.S. tariffs, which have been a pressure point amid ongoing trade disputes. However, this advantage might be limited if other countries retaliate with their own trade measures. Imports, particularly commodities like oil and food, become more expensive with a weaker yuan. Given China’s reliance on imported raw materials, this could drive up domestic inflation, squeezing consumers and businesses already grappling with economic slowdown.

A depreciating currency might spook investors, leading to capital flight as they seek safer assets elsewhere. This could force the PBOC to tighten capital controls or burn through foreign reserves to stabilize the yuan, both of which have costs—either to financial openness or to reserve buffers. Chinese companies with U.S. dollar-denominated debt (a significant amount exists) will face higher repayment costs as the yuan weakens, potentially straining corporate balance sheets and increasing default risks.

The yuan’s slide could escalate trade frictions, especially if the U.S. perceives it as deliberate currency manipulation to undercut American tariffs. This might trigger stronger rhetoric or policy responses from Washington, like labeling China a currency manipulator again, reigniting a cycle of retaliation. A weaker yuan, if it fuels inflation or erodes purchasing power, could stoke public discontent in China, challenging the Communist Party’s narrative of economic competence. The PBOC’s balancing act—letting the yuan weaken but not too much—will be under scrutiny.

A weaker yuan often pressures other emerging market currencies, as investors pull back from riskier assets. Countries in Southeast Asia or those competing with China in exports e.g., Vietnam, India might see their currencies weaken too, sparking a regional and global depreciation trend. Since China is a major consumer of commodities, a weaker yuan could dampen demand due to higher import costs, potentially softening global prices for oil, metals, and grains. This might benefit commodity importers but hurt exporters like Russia or Australia.

The yuan’s decline reinforces the U.S. dollar’s dominance, especially as U.S. bond yields rise. This dynamic could complicate monetary policy for other central banks, particularly those trying to avoid imported inflation from a strong dollar. The PBOC’s willingness to let the yuan weaken—evidenced by the midpoint rate dropping to 7.2038 and the currency hitting 7.33 onshore—suggests a calculated gamble. It’s a response to external pressures (tariffs, dollar strength) and internal needs (export support), but it risks amplifying volatility if markets lose confidence.

Historically, sharp yuan depreciations—like in 2015—have rattled global markets, and while controls are tighter now, the interconnectedness of trade and finance means the effects won’t stay contained to China. In short, this yuan slump could juice China’s exports short-term but at the cost of heightened domestic and international strain—economically destabilizing if mishandled and politically charged given the U.S.-China rivalry.