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Concerns in the digital currency market have intensified after the price of Bitcoin fell below $80,000, with some warning that the current decline may not be just a temporary adjustment, but the beginning of wider pressures that could threaten the stability of companies and institutions whose financial strategies are based on holding the digital currency Bitcoin.
Prominent investor Michael Burry warned that the continued decline in Bitcoin prices could lead to a significant reduction in market value, with the greatest risks centered on companies whose financial coffers rely extensively on Bitcoin.
In comments following the latest wave of selling, he noted that breaking important technical levels could bring about continuous pressures that are not limited to the cryptocurrency market but also extend to the financial sector related to it.
Perry believes that Bitcoin has recently failed to fulfill the role that many rely on as a hedge against the erosion of currency value, as its behavior has become closer to that of a riskier asset, especially closely related to the movement of the S&P 500 Index.
While gold and silver have rallied on the back of geopolitical tensions and a weak US dollar, Bitcoin has not shown a similar reaction.
He also warned that any further decline, even 10%, could cost large companies with large holdings of Bitcoin, such as Michael Saylor, billions of dollars in losses, which could limit their ability to access financing markets and increase the risk of default or bankruptcy.
He said the situation could amplify losses and have an aggressive impact on the overall market.
“Zach Prince” from “Galaxy Digital” questioned the sustainability of the “Bitcoin Finance Company model” that raises funds for the purpose of holding currency and providing returns, arguing that these models rely more on high-risk financial engineering rather than the intrinsic value of Bitcoin.
He emphasized that companies must first focus on actual operational activities and use Bitcoin as a supporting financial tool rather than as the core of activities.
Against the same backdrop of declining optimism across the market, Binance CEO CZ admitted that a rising wave of fear and uncertainty has left him less confident about Bitcoin’s near-term prospects, while just a few weeks ago he was talking about a possible strong upward cycle.
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Ethereum price fell more than 25% in a week: analysts may test the $2,000 level before recovering
Cryptocurrency market trends remain sensitive to U.S. political risk: Details
