Shocking as some coiners believes that BTC will be going down to zero, while others are still waiting for the main bull run to begin. I was scrolling through tiktalk today, when I stumbled on a video where one crypto guru predicts that BTC will be going down to zero, I mean going down to $0.00001. I stopped for while and thought of that, with some questions bubbling in my head like; "what kind of crystal ball did this dude pull that from?" and he has about 2 million plus followers. You see that, so you can imagine how many people are consuming such content, a very poisonous mind-shift potential enough to cast fear in people's mind which could greatly affect the market psychology and sentiment.
But let's imagine this was happening or going to happen, how would this affect giant institutional holders like; Blackrock (ishares bitcoin trust ETFs, IBIT) who are currently holding over 805,000 BTC worth $96 billion and Strategy who are currently holding up to 650,000 BTC worth up to $78 billion. Certainly the impact will be different based on their exposure as Blockrock is with indirect exposure, while Strategy is direct exposure. with leveraged.
Now let's begin with Blackrock. How would a complete wipe-out in Bitcoin's value ruin this world largest asset manager with over $11 trillion plus in management ? well first, Blockrock's ETF structure prevent them from sudden and direct BTC financial ruin, however, a completely wipe-out will greatly affect them severely.
WHAT WOULD HAVE HAPPEN:
First, there would be massive outflows and heavy losses. ETF shares would run to zero, vaporizing $75 billion plus in client asset within a twinkle of an eye. This would trigger massive redemption, similar to (but far worse than) the $2.3 billion outflows IBIT saw recently this November amid a milder 30% BTC dip. Pension funds, endowments, and retail investors would face catastrophic losses, eroding trust in BlackRock's crypto ETF offerings
Secondly, That would ruin Blockrock's operations completely leading to lost of confident from investors, and many would question their expertise in digital asset management, potentially shifting investors focus to competitors. Still there would be a very serious fear resulting to a complete lost of trust in crypto as well as ETFs industry.
SO WHAT ABOUT STRATEGY?
Strategy holds over 650,000 BTC has their primary asset, which are acquired through debt worth over $42 billion. The yield strategy developed by Michael Saylor makes it look like (makes it) a leverage bet on Bitcoin's appreciation. So if a sudden dropped of BTC price to zero occurs , that will utterly destroy and wiped out it's balance sheet, which might result to bankruptcy.
Since Strategy holds BTC which is 99% of it;s liquid assets, If prices run to zero, over $60 billion would vanish, leaving the institution in a very huge debt over $5billion in value and will have nothing left to pay back, so certainly, lenders may demand immediate repayment and seize the collateralize BTC while trying to force sell them in a crashing market might worsen the situation as that would fuel a more decline in BTC price and no one will buy. So everything will go crashing down to zero.
Equity holders (MSTR stock) would be wiped out, with shares likely delisted from Nasdaq mirroring the 90% drawdowns in past cycles but without rebound potential. Everything will go to zero and Strategy would be no more.
