In January 2026, Liquid Capital (formerly LD Capital) founder Yi Lihua rarely concentrated on responding to market doubts about his high-leverage ETH long positions, laying out his personal positions alongside his judgment on the next big cycle in the sunlight. On one hand, he insists that the macro turning point from interest rate hikes to cuts in the U.S. is imminent, and the crypto market is at the end of the "most difficult phase in the past four years"; on the other hand, amidst the debate over whether the four-year halving cycle has failed and whether high-leverage ETH can withstand volatility, he provides his gambling logic—ETH will outperform BTC and grow into the global core settlement layer. This narrative sharply contrasts with the current market's gloomy sentiment: The Coinbase Bitcoin premium index has been in negative territory for 9 consecutive days, with a representative figure of -0.1399%, indicating a clear tendency for funds to seek safety, which stands in stark contrast to the "eve of a bull market" he describes.
Four-Year Cycle Belief Collides with Crypto's Darkest Moment
● Market Situation: Yi Lihua defines the current moment as "the most difficult phase in the crypto market over the past four years," indicating that not only are prices under pressure, but more critically, the narrative and confidence have collapsed. From Bitcoin's high retreat, mainstream coins' continuous decline, to the slowdown of incremental funds and decreased trading activity, the entire industry seems locked in a high-interest, low-risk preference environment, with the traditional optimism of "halving equals bull market" being ground into caution or even pessimism by reality.
● Cycle Failure Controversy: The traditional four-year cycle theory is based on the interplay of supply contraction from BTC halving and liquidity expansion, while the U.S. is currently in a misaligned phase transitioning from rate hikes to cuts, with high funding costs and pressure on risk assets. Consequently, the "theory of cycle failure" has gained popularity, arguing that the current macro environment is completely different from the past, and a single supply factor is no longer sufficient to drive a new bull market; the belief in cycles is being tested by reality.
● Negative Premium and Risk Aversion: The Coinbase Bitcoin premium index has been in negative territory for 9 consecutive days, with a representative figure of -0.1399%, indicating that the demand for BTC in compliant overseas markets is weaker than in the over-the-counter market, with institutions and compliant funds tending to reduce risk exposure. Negative premiums are not only sentiment indicators but also concrete manifestations of fund behavior—when risk aversion is materialized on leading platforms, the belief that "traditional cycles will always fix everything" is forced to confront the cold pressure of the order book.
● Precious Metals Footnote: Tom Lee's view that "crypto assets often catch up after precious metals rise parabolically" adds a variable of time and emotion to this battle of beliefs. If this logic holds, after gold, silver, and others first demonstrate risk aversion and inflation hedging emotions at the end of high interest rates, liquidity and risk preference may partially migrate to crypto assets, potentially delaying the cycle's rhythm rather than completely failing, leaving room for the imagination of "a window for catch-up after the darkest moment."
High-Leverage ETH Longs: From Absolute Safety to Passive Hedging
● Meaning of "Absolute Safety": Yi Lihua claims that his ETH position is "absolutely safe" above $1,000, essentially delineating a safety margin far from the current market price, implying that even if a deep correction occurs, as long as it does not fall below this level, the position will not trigger systemic risk. The controversy surrounding this statement lies in the fact that the safety threshold is based on personal risk control models and also depends on external liquidity and volatility environments; for external investors who do not understand his capital size and liquidity sources, it is difficult to simply view it as a replicable experience.
● Positioning of Liquidation Near $4,500: He defines the liquidation behavior near $4,500 as a "risk hedging operation" rather than a bearish turn, emphasizing that it is an active reduction of leverage at high levels to recover ammunition in response to potential macro uncertainties and market pullbacks. This means that within his strategic framework, high leverage is not merely about increasing positions but dynamically adjusting risk exposure within a range; however, it is difficult for outsiders to distinguish whether this is systematic risk control or a repackaging of position changes after the fact.
● Risk-Return Structure of Leverage: In an environment where interest rate hikes have not fully reversed and Coinbase's continuous negative premium reflects risk aversion, a strategy heavily invested in ETH longs with added leverage naturally amplifies beta risk. Once ETH follows the overall market down in the short term, high leverage will instantly transform the "long-term bullish" logic into a passive margin call or even a liquidity crisis of forced liquidation; conversely, if interest rate cut expectations are realized and liquidity returns, ETH may once again enter a trending market, significantly amplifying its relative returns compared to BTC, forming a high-risk, high-reward structure.
● Information Blind Spots and Trust: Surrounding this strategy, the undisclosed position size and borrowing ratio have become one of the focal points of debate. For retail investors, without visibility into specific leverage multiples, financing costs, and liquidation lines, they can only passively accept qualitative descriptions like "absolute safety" and "risk hedging," with the safety margin largely built on trust in personal expertise and past performance. When the macro environment is volatile and market fluctuations intensify, this "trust based on individuals rather than data" structure is naturally prone to magnified skepticism.
From RWA to Settlement Layer: Yi Lihua's Ethereum Endgame Narrative
● RWA and Settlement Layer Vision: Yi Lihua's ultimate vision for ETH partly stems from the settlement demand brought by RWA (Real World Assets) tracks and the global circulation of dollar stablecoins. As various government bonds, credit assets, and bills are mirrored on-chain, coupled with the need for cross-border funds for a programmable, auditable, and sufficiently secure public ledger, ETH is seen as a leading candidate to undertake this settlement flow, thereby surpassing traditional assets that "only represent price" in scale and discourse power.
● Functional Advantages of ETH Relative to BTC: In his narrative, ETH has the opportunity to outperform BTC not only due to supply-side deflation expectations but also because of the composability of smart contracts, DeFi protocols, and integration with real-world assets. Compared to BTC, which is more often positioned as "digital gold," the ETH ecosystem has already formed a complex financial Lego in areas such as lending, derivatives, asset issuance, and settlement, making ETH not just a "store of value," but potentially an active "value settlement and clearing layer."
● Technical Endorsement of Ecological Expansion: Progress similar to Ave.ai achieving millisecond-level transactions across multi-chains like BNB Chain and Solana demonstrates the accelerated iteration of Ethereum and its surrounding ecosystem in high-frequency trading and cross-chain interactions. Although these technologies do not all occur directly on ETH L1 itself, they feed back into the overall Ethereum network effect in the form of sidechains, Rollups, and cross-chain infrastructure, providing speed and user experience for the imagination of "ETH becoming the core settlement layer."
● Undisclosed Technical Puzzle: In this narrative, paths like the "DAT model," which have not been fully explained, are repeatedly mentioned but lack clear definitions, adding a layer of uncertainty to the story. On one hand, such concepts provide layout planners with an "unfinished story" imagination space; on the other hand, before specific technical implementations and risks are fully disclosed, overly relying on these keywords to support long-term valuations and endgame positions inevitably leads cautious investors to maintain a reserved attitude.
Can ETH Continue to Outperform BTC in Multi-Cycle Tests?
● Historical Relative Return Review: In past cycles, ETH has often shown significant premiums relative to BTC from mid to late bull markets, especially during the DeFi Summer and NFT boom, where the ETH/BTC exchange rate surged, reflecting funds' willingness to buy into its ecological narrative. However, during macro tightening or risk event phases, ETH's pullbacks relative to BTC are often more severe, indicating that its relative returns highly depend on an environment where "risk preference and innovative narratives soar," making it difficult to maintain strength under pure risk aversion logic.
● Funding Preference Under Rate Cut Expectations: The current market has one side expecting U.S. rate cuts and liquidity returns, while the other side reflects risk aversion as indicated by Coinbase's negative premium, with funds oscillating between "betting on recovery" and "first ensuring survival." In this environment, BTC, as "digital gold," is more easily viewed as a conservative entry point for crypto allocation, while ETH sits at a risk level "between blue chips and growth stocks," having the opportunity to surpass BTC when risk preferences recover, but also bearing greater selling pressure when confidence is lacking.
● Quantum Risk and Long-Term Security Expectations: Willy Woo mentioned that the "quantum Bitcoin" defense plan is expected to launch in January 2025, symbolizing that the BTC community is beginning to confront potential quantum computing threats and is working on defense route planning. Although details have not been fully disclosed, this adds an important piece to the long-term security narrative of BTC. In the long-term competition between ETH and BTC, if BTC successfully solidifies its position as "the ultimate safe asset," while ETH continues to expand in execution and settlement layers, the two may further differentiate into "endgame reserve assets" and "global settlement layers," rather than a simple substitution relationship.
● Possibility of Role Reshaping: If Yi Lihua's judgment holds, and ETH's share in RWA, on-chain finance, and cross-border settlement continues to rise, its on-chain pricing and clearing functions will attract more capital flows. At that time, BTC may further solidify as a macro hedge, institutional allocation, and long-term reserve tool, while ETH's market share will be more closely linked to actual economic activities, driving a transition from "price index" to "traffic hub," and the comparison of the two in terms of market capitalization and valuation systems will also be rewritten.
Is a Macro Turning Point Approaching? The Crypto Rotation Game Under Rate Cut Expectations
● Timeline from Rate Hikes to Cuts: Over the past two years, the U.S. has continuously raised interest rates, increasing the risk-free rate and compressing the valuation space for risk assets, including tech stocks and crypto assets. The current market generally expects to gradually enter a transition phase from rate hikes to cuts around 2026, but the pace and magnitude remain highly uncertain. For the crypto market, this transition period is precisely a key window for valuation repricing and capital redistribution, with any monetary policy meeting potentially altering short-term trends.
● Rotation Path of Precious Metals and Crypto: The logic emphasized by Tom Lee of "crypto catching up after precious metals rise parabolically" provides a possible path for the rotation of risk assets: during the phase of rising macro uncertainty, funds first flow into traditional safe-haven assets like gold and silver; once a consensus forms on interest rates peaking and medium to long-term inflation pressures, some funds then migrate to high-beta assets, with crypto becoming "the next stop." If this rhythm holds, we may still be at the tail end of the "precious metals phase," while the main surge in crypto is delayed rather than canceled.
● Emotional Collision in Bull Market Eve Judgment: On one side, Coinbase Bitcoin has been in negative territory for 9 consecutive days, with a representative figure of -0.1399%, indicating that institutions prefer to reduce risk; on the other side, Yi Lihua's firm judgment of "the eve of a bull market" believes that the macro turning point and ETH narrative are gradually resonating. This stark contrast reflects the market's divergence on the time dimension: the vast majority of funds are more concerned about "whether the next three months will be worse," while a few aggressive bulls are betting on "a new price center one to two years from now."
● The Risk of Rate Cuts Not Saving Sentiment: It is important to consider that if rate cuts materialize as expected, but credit risks or economic recession fears suppress risk preferences, funds may choose to remain in cash, government bonds, and gold, rather than rushing into high-volatility assets like crypto. For ETH longs and the broader altcoin sector that rely on leverage to amplify expected returns, this would be the most dangerous combination—macro "good news" has been realized, yet true incremental buying fails to materialize, and high-leverage positions are slowly eroded by interest and volatility over time.
The Cost of Betting on Ethereum: Faith, Leverage, and Incomplete Information
Yi Lihua's public "bet on Ethereum" is essentially a highly concentrated cyclical wager: he is betting that the macro turning point from tightening to loosening is imminent, ETH will continue to outperform BTC in the next cycle, and the Ethereum ecosystem will continuously expand in the directions of RWA, on-chain finance, and settlement layers. As long as these three major premises are simultaneously met and the time window is long enough, a high-leverage strategy has the opportunity to transform this logic into a return curve that far exceeds conventional allocations.
However, this strategy also exposes its most vulnerable link: on one hand, the safety margin of leverage highly depends on personal risk control models and funding conditions, making it difficult for external investors to replicate; on the other hand, the undisclosed position size and borrowing ratio create information asymmetry, which becomes a source of systemic risk, making it hard for observers to assess its true stress resistance in extreme market conditions. For ordinary investors, treating such highly individualized "bets" as universal strategies is akin to tying their fate to unknown parameters of others.
In this sense, it is more important not to take sides as "cycle believers" or "failure theorists," but to learn to distinguish between emotional narratives and quantifiable risks: the four-year cycle, macro turning points, and the vision of ETH as a settlement layer are all long-term hypotheses that can be studied and discussed, but leverage multiples, funding costs, and liquidation lines must return to cold, hard numbers and personal tolerance. Do not make decisions based on others' time scales and asset sizes.
In the next one to two years, several key validation points are worth paying attention to: the actual path and pace of U.S. interest rate cuts, ETH's real usage share in RWA and on-chain finance, the performance of the ETH/BTC exchange rate in different macro phases, and the progress of long-term narratives like quantum security. For ordinary investors, a more pragmatic survival approach might be: reduce reliance on a single major narrative, control leverage and overall positions, extend observation periods while shortening betting periods, and use small-scale, bearable trial and error to validate their understanding in an uncertain macro cycle, rather than going all in on anyone's gamble.
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