The price of other digital currencies, cryptocurrency businesses, institutional investors, and the entire financial system will be impacted if the price of BTC falls to zero.
Now, if the price of BTC drops to zero, it will have an effect on the value of other cryptocurrencies. Therefore, depending on their type of investment, many investors could simply withdraw (totally or substantially) to cut losses.
Because more and more major institutional investors have made larger investments to diversify their portfolios, they may be particularly at risk. Those that invested more recently at high prices or in cryptocurrency futures would be most exposed, and they would have to liquidate other assets to meet margin calls.
Customers’ lack of trust in the system might hurt cryptocurrency businesses like Coinbase, Binance, and others who depend on transaction flow from customers to generate income and funding/investments to expand. Additionally, investments in these businesses could completely halt or drastically decrease. These businesses can also lose their ability to recruit, retain, or pay the workers they need to operate and grow.
In addition, there is a chance that the contagion will affect the rest of the financial system, if only momentarily, because of:
There is downward pressure on other assets, such as those sold at a fire sale to earn cash to pay for commitments like salary, margin calls, upkeep of property, etc.
the buildup of bad debt or non-performing loans as a result of missed payments