Ripple CTO David Schwartz has expressed concern over MicroStrategy’s financial exposure to Bitcoin, warning that a major plunge in BTC’s value could have serious consequences for the company.

Why Ripple’s CTO Is Concerned

In a recent post on social media platform X, Schwartz offered his perspective on MicroStrategy’s heavy investment in Bitcoin. The company, led by Executive Chairman Michael Saylor, has amassed more than 226,000 BTC, a bold strategy that ties its financial health directly to the cryptocurrency’s price volatility.

Schwartz remarked, “They won’t do great if BTC takes a huge plunge,” suggesting that a steep drop in Bitcoin could significantly impair MicroStrategy’s performance.

MicroStrategy’s Ongoing Bitcoin Accumulation

Despite the risks, the company continues to acquire more Bitcoin. MicroStrategy’s latest purchase added approximately $786 million worth of BTC to its holdings, funded in part by convertible debt offerings. Founded in 1989 as a business intelligence firm, it has since transformed into a corporate proxy for Bitcoin investment under Saylor’s leadership.

While some investors have appreciated this strategy as a bold vote of confidence in Bitcoin, others—including Ripple’s top executive—are sounding alarms about its long-term viability, particularly in the event of a significant market correction.

How Would a Bitcoin Crash Impact MicroStrategy?

The concern centers around the degree of leverage and concentration risk MicroStrategy faces. The company currently finances many of its Bitcoin purchases using debt, betting on BTC’s long-term growth to remain solvent and profitable. Should the market move against them and prices crash, the debt burden could become unsustainable.

Schwartz’s comments underscore growing apprehension in the crypto industry about large corporations adopting aggressive crypto-forward strategies without hedging sufficiently against downside risk. It’s a reminder that while institutional involvement can lend credibility to the crypto space, it does not eliminate volatility or financial exposure.

Schwartz’s Broader View on Risk

David Schwartz is a well-known figure in the blockchain sector, particularly for his work on the XRP Ledger. As Ripple’s Chief Technology Officer, he possesses both technical depth and awareness of market dynamics. His statements often attract attention from both crypto enthusiasts and legacy investors alike.

In this case, his concerns reflect broader market dynamics—namely, that asset concentration and speculative leverage, no matter how well-funded the entity, come with inherent risks. These lessons aren’t new to traditional finance but are taking shape now in digital asset markets as crypto weaves itself further into global portfolios.

Related: XRP, Bitcoin Could React to Inflation Data

A depiction of financial uncertainty within the crypto market as companies tie their fate to volatile cryptocurrencies.