Determinants of species diversity in microbial ecosystems remain poorly understood. Bacteriophages are believed to increase the diversity by the virtue of Kill-the-Winner infection bias preventing the fastest growing organism from taking over the community. Phage-bacterial ecosystems are traditionally described in terms of the static equilibrium state of Lotka-Volterra equations in which bacterial growth is exactly balanced by losses due to phage predation. Here we consider a more dynamic scenario in which phage infections give rise to abrupt and severe collapses of bacterial populations whenever they become sufficiently large. As a consequence, each bacterial population in our model follows cyclic dynamics of exponential growth interrupted by sudden declines. The total population of all species fluctuates around the carrying capacity of the environment, making these cycles cryptic. While a subset of the slowest growing species in our model is always driven towards extinction, in general the overall ecosystem diversity remains high. The number of surviving species is inversely proportional to the variation in their growth rates but increases with the frequency and severity of phage-induced collapses. Thus counter-intuitively we predict that microbial communities exposed to more violent perturbations should have higher diversity.