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“Big Short” investor Michael Burry has often been critical of cryptocurrencies. For someone who correctly predicted the 2008 housing crisis and the 2000 dot-com bubble, his words often carry weight in market commentary.
Burry is sounding the alarm on Bitcoin (BTC), once again, after the weekend's crypto market crash saw billions getting wiped out, and cryptocurrencies fell to new lows.
Burry sees ‘sickening scenarios’
In a Substack post published on Feb. 2, Burry warned that Bitcoin's recent breakdown below key price levels could trigger cascading effects across crypto and adjacent markets.
Burry argued that Bitcoin is failing a crucial test: proving itself as a durable hedge against currency debasement. Instead, he said, the asset is behaving like a purely speculative trade, unlike gold or silver, which have rallied amid geopolitical stress and dollar weakness.
His warning comes as Bitcoin continues to slide, briefly dipping below $74,000 and erasing all gains made since Donald Trump was re-elected in November 2024. At press time, Bitcoin was down 2.8% and trading at $76,463.19.
Burry said Bitcoin’s fall through major thresholds has opened the door to what he called “sickening scenarios.” One of the biggest risks, in his view, lies with corporate treasuries that have aggressively accumulated Bitcoin. If prices fall another 10%, Burry warned that Michael Saylor's Strategy (NASDAQ: MSTR), among the largest corporate holders, could be billions of dollars underwater, effectively shutting it out of capital markets.
Notably, Bitcoin has failed to respond to traditional macro tailwinds. While precious metals rallied to record highs amid geopolitical tensions, Bitcoin did not benefit from dollar weakness or risk-off flows.
ETFs and corporate treasuries may amplify downside
While Bitcoin’s adoption by public companies and spot exchange-traded funds has expanded demand, Burry argues that this support is far less stable than many investors assume. Nearly 200 public companies now hold Bitcoin on their balance sheets. But treasury assets must be marked to market, meaning sustained price declines could force risk managers to recommend selling, potentially accelerating losses.
Burry also said spot Bitcoin ETFs have intensified speculation while increasing Bitcoin’s correlation with equities. He noted that Bitcoin’s correlation with the S&P 500 has recently approached 0.50, raising the risk of synchronized sell-offs. ETF flows already appear to be flashing warning signs. According to Burry, Bitcoin ETFs have recorded some of their largest single-day outflows since late November, with three occurring in the final 10 days of January. In his view, once losses deepen, forced liquidations could kick in aggressively.
From crypto to metals: contagion at the margins
Despite the grim outlook, Burry does not believe Bitcoin alone can destabilize the broader financial system. With a market value below $1.5 trillion, limited household exposure, and narrow corporate adoption, any wealth effect should remain contained.
Still, he warned of second-order impacts. Burry pointed to recent weakness in gold and silver, suggesting falling crypto prices forced treasurers and speculators to de-risk by selling profitable positions in tokenized metals futures, instruments that are not backed by physical metal. Because these products can overwhelm physical markets, Burry said they risk triggering a “collateral death spiral.” He estimated that up to $1 billion in precious metals may have been liquidated at the end of the month due to crypto-driven stress.
If Bitcoin were to fall to $50,000, Burry warned, miners could go bankrupt and tokenized metals futures could “collapse into a black hole with no buyer.”
This article has been published in thestreet.com via Yahoo News.
'Big Short’ Michael Burry sends chilling warning after Bitcoin plunge
“The Big Short” investor Michael Burry has often been critical of cryptocurrencies. For someone who correctly predicted the 2008 housing crisis and the 2000 dot-com bubble, his words often carry weight in market commentary. Burry is sounding the alarm on Bitcoin (BTC), once again, after the ...
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