Michael Burry, the investor famously portrayed in The Big Short for predicting the 2008 financial crisis, has issued a fresh warning about potential spillover risks from the recent downturn in Bitcoin. According to Burry, the sharp correction in crypto markets may already be forcing investors to liquidate positions in other asset classes — including gold and silver.
In a recent post on Substack, Burry argued that losses in cryptocurrencies could have compelled institutional investors and corporate treasury managers to sell profitable assets elsewhere in order to rebalance risk and cover margin requirements. He suggested that as much as $1 billion worth of precious metals may have been sold off in late January as a direct consequence of crypto-related stress.
Burry pointed to the late-January pullback in gold and silver prices, noting that speculators and treasury managers often reduce exposure by locking in gains on winning positions during periods of heightened volatility. This includes positions linked to tokenized precious metals and futures contracts, which can be unwound quickly when liquidity is needed.
Bitcoin briefly fell below $73,000, representing a drawdown of roughly 40% from its recent peak. Burry argues that this decline highlights what he views as Bitcoin’s fragile foundation and poses increasing risks for companies with significant BTC exposure, including corporate holders such as Strategy (MSTR).
He further stated that Bitcoin lacks sufficient real-world utility to naturally stabilize or reverse a major downtrend. In a more severe scenario, Burry warned that a drop toward $50,000 could place substantial financial pressure on Bitcoin mining companies, potentially pushing some toward insolvency. At the same time, he cautioned that tokenized precious metals markets could face a liquidity vacuum, describing a scenario where futures markets “fall into a buyerless void.”
Burry also challenged Bitcoin’s narrative as a “digital safe haven” or a long-term alternative to gold. He dismissed the idea that corporate or institutional treasury adoption provides durable price support, emphasizing that treasury allocations are inherently temporary and subject to rapid reversal under financial stress.
While recent Bitcoin gains were largely driven by the launch of spot ETFs and increased institutional interest, Burry views these catalysts as cyclical rather than structural, arguing they do not represent deep or sustainable economic adoption. In his view, Bitcoin remains a highly speculative asset with limited intrinsic value and constrained real-world use.
Although Burry’s bearish outlook often sparks controversy, many note that his past warnings have, at times, proven prescient. For investors with significant exposure to crypto, his latest comments raise broader questions about how a prolonged Bitcoin downturn could trigger chain reactions across traditional and alternative financial markets.
This article is published for informational purposes only as a personal blog post and does not constitute investment advice. Investors should conduct their own independent research before making any decisions. We do not take responsibility for any investment outcomes.
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