Michael Burry Warns Bitcoin Breakdown Could Trigger “Sickening” Cascade

Famous investor Michael Burry, portrayed by Christian Bale in the movie The Big Short, is warning that Bitcoin’s (BTC) latest slide could trigger large losses for listed companies and spill over into other markets.

In a Substack post, Burry said BTC has been exposed as a purely speculative trade rather than a reliable hedge against currency debasement, and unlike gold and silver, which recently hit record highs on geopolitical tension and dollar fears, the primary crypto asset has fallen through several key price levels.

BTC briefly dipped below US$73,000 (AU$111K), erasing gains since Donald Trump’s November 2024 re-election. The coin is down more than 40% from its early-October peak, according to CoinMarketCap data.

Related: Michael Saylor Hints at Fresh Bitcoin Buy as Strategy Stacks More BTC 

Bitcoin in a Sickening Condition, Says Burry

Burry called current conditions “sickening,” arguing that another 10% decline would leave aggressive corporate buyers such as Strategy billions of dollars underwater and effectively cut off from raising fresh capital. 

There is no organic use case reason for Bitcoin to slow or stop its descent.

Michael Burry, American Investor and Hedge Fund Manager

Nearly 200 public companies now hold Bitcoin on their balance sheets, he noted, and those positions must be marked to market. If prices keep falling, he expects risk officers to push for sales. Basically selling their positions in other assets to cover up losses.

At the same time, though, Burry said crypto’s aggregate size limits the chance of a systemic crisis. Bitcoin’s market value is below about US$1.5 trillion (AU$2.30 trillion), household exposure is modest, and past failures from Terra to FTX did not destabilise traditional finance.

Nevertheless, he sees pockets of serious stress. Burry linked falling crypto prices to what he described as up to US$1 billion (AU$1.53 billion) of liquidations in tokenised gold and silver futures at month-end. Because those products are not backed by physical metal, he warned they can overwhelm real bullion trading and create a “collateral death spiral.” 

It looks like up to $1 billion in precious metals were liquidated at month’s very end as a result of falling crypto prices. If Bitcoin were to fall to $50,000, miners would go bankrupt, while tokenized metals futures would collapse into a black hole with no buyer.

Michael Burry, American Investor and Hedge Fund Manager

Read more: Bitcoin Breaks Key Support as Bears Circle Below $80K

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