Recently, I’ve been asked a common question: in the event of a real financial crisis, should I sell my Bitcoin to cut losses or hold my position? From another perspective, should crypto assets be viewed as a safe haven, or are they the first to suffer when disaster strikes?

My answer is: both are correct. Or rather, it depends on which time horizon you are considering. In the short term, crypto assets are indeed the most vulnerable among risk assets and are most likely to be bloodied. But in the long run, they could become an important hedging tool. Understanding this turning point can fundamentally help you surpass most traders’ thinking.

**Why the short term is inevitably a disaster zone**

Currently, the global economy faces two major hidden dangers, each capable of triggering intense market turbulence.

The first is uncontrolled debt. The US national debt has already surpassed $37 trillion, and Japan is even more extreme—its debt-to-GDP ratio is as high as 250%, a figure more outrageous than Greece’s during the Euro crisis. Over the years, central banks around the world have been printing money recklessly, and the side effects are now emerging: high interest rates combined with high debt form a deadly combination. Once the debt chain breaks, liquidity will rapidly drain from the market, and risk assets will be indiscriminately sold off. Recall the scene at the start of the 2020 pandemic, when the stock market crashed, Bitcoin fell even more sharply. This is not coincidence; when liquidity tightens, all high-risk assets tend to be sold off.

The second hidden danger stems from bubble accumulation in the AI sector. Nvidia’s market cap now nearly equals the combined value of the top twenty European companies, which highlights how serious the situation is. Even more concerning, industry executives are quietly reducing their holdings—Jensen Huang cashed out $900 million, and Bezos and Zuckerberg are also frantically offloading assets. These insiders have firsthand information, and their actions are essentially a vote with real money: the bubble is indeed about to burst.

Moreover, the capital flow between the crypto market and AI concept stocks is becoming increasingly intertwined. Many venture capital funds are invested in both AI and crypto assets. Once the AI sector experiences a sharp decline, these capital chains will break immediately.

**Reversal in the long-term perspective**

But this does not mean that crypto assets have no value in the long run. On the contrary, it is precisely because of these systemic risks that their hedging properties will become more apparent. If the traditional financial system faces a genuine credit crisis, the scarcity and independence of decentralized assets will be revalued. This process will be painful, but for those who can endure it, opportunities will also emerge.

The key is to understand your investment cycle. If you are a short-term trader, you must accept that your assets will be washed out just like all risk assets; if you can withstand medium- and short-term volatility, then from a long-term allocation perspective, extreme risk periods might actually be the best window for strategic positioning.