⚠️ «Death Spiral» for Bitcoin — is a realistic risk

Analysts indeed describe a risk where the price drop of Bitcoin could trigger a chain reaction. The mechanism involves seven stages:

1. Beginning: Price drop of Bitcoin.

2. Market reaction: Correction of the stock value of companies accumulating BTC.

3. Capital issues: Emergence of difficulties in attracting financing.

4. Debt liquidation: Forced reduction of asset values to cover liabilities.

5. BTC sell-off: Selling Bitcoins from the balance to pay off debts.

6. Escalating decline: Further market crash due to sell-offs.

7. Systemic crisis: Possible transition of the crisis into the real economy.

The main vulnerability is companies that actively attracted debt for purchasing Bitcoin. Fortunately, most companies used equity for this purpose, which reduces systemic risks.