Crypto’s opera is nearing its final act

Ross Illingworth

Kingfisher Capital Partners

Melbourne, Vic 

Australian Financial Review
OPINION
4 December 2025

The risk-off sentiment (‘‘Why the new crypto winter matters’’, December 3) has not just rattled equities, but it has also shredded cryptocurrencies (‘‘Fear and loathing come for bitcoin’’, December 3). 

The late Charlie Munger called bitcoin ‘‘rat poison’’, and Warren Buffett went a step further, terming it ‘‘rat poison squared’’, even as many others heralded it as ‘‘the new gold.’’ One thing, however, is now clear: the great crypto unwind could become an uncontrolled wildfire. 

We may be witnessing the beginning of a crypto ‘‘nuclear’’ winter. Bitcoin speculation resembles a modern, ‘‘electronic’’ version of the Dutch tulip bulb bubble of the 1630s. A speculative token of greed that ordinary investors bought into with real money is now at risk of reverting to its intrinsic value: an electronic signal with no underlying cash flow, claim or utility. 

Consider Michael Saylor, who transformed Strategy into a leveraged bitcoin vehicle, selling corporate debt to accumulate 650,000 bitcoin worth $US56 billion. All is well so long as the party continues, the music keeps playing, and the punch bowl is topped up. The combination of leverage and speculation in a falling market is not a strategy; it is a reckoning delayed. 

In the 1980s, the Hunt Brothers cornered the silver market, amassing about 100million troy ounces of silver. When their fleeting grip slipped, broker margin calls followed. The fear became systemic, and major US brokerages were at risk. A consortium of banks extended a $US1.1 billion line of credit to bring calm to the situation. Even then, the Hunts lost US$1 billion. 

The pattern is unmistakable. Concentrated speculative positions, leverage, liquidity evaporating under stress — and a dramatic final act!