Will MicroStrategy's constant buying of Bitcoin lead to a crash???

Starting from September 2024, MicroStrategy launched a Bitcoin financing plan totaling $42 billion, expanding to $84 billion by May 2025. As of now, the company holds approximately 580,000 Bitcoins, with an average purchase price of about $70,000. Over the past year, they have added about 380,000 Bitcoins, utilizing over $30 billion in financing, and have completed roughly one-third of the overall financing plan.

Some believe that the rise of Bitcoin over the past year is largely due to MicroStrategy's buying. After all, only 160,000 new Bitcoins were mined this year, but they bought more than twice that amount, frequently making purchases without regard to price. Saylor has clearly stated that he is betting on the long-term future of Bitcoin, rather than short-term price fluctuations.

However, the premise of this aggressive strategy is that the Bitcoin price cannot remain below the cost line for an extended period. Otherwise, the massive debt interest will force the company to sell coins to maintain operations. Currently, their perpetual debt scale is about $2 billion, with over $50 million in interest payments required each quarter; if the debt continues to expand, the pressure will quickly escalate. If Bitcoin enters a low-level fluctuation for two years, the interest expenses alone could reach $4 billion.

Once the market realizes that MicroStrategy can only rely on selling coins to support its debts, confidence will waver, and prices may come under further pressure, creating a continuous downward feedback loop. As Buffett said, companies that do not control cash flow will ultimately be dominated by creditors.

The existence of MicroStrategy is reshaping the price cycle of Bitcoin: bull markets are stronger, and bear markets are deeper. They are betting that the time and magnitude of the rise will exceed the fall, but the more successful the strategy, the easier it is to drive greater leverage, potentially triggering systemic risks.

History tends to repeat itself. If a financial crisis similar to that of 2008 erupts in the future, with the S&P plummeting 50% and Berkshire's stock price halving, Bitcoin may also drop by over 80%. By then, companies like MicroStrategy that are heavily leveraged in buying coins may not survive, and once liquidation occurs, the market will face a new round of abyss.

As the old saying goes: When you come out to mix, you will eventually have to pay it back. MicroStrategy will definitely face a crash, and it will be the biggest crash in the crypto world.