2 hours ago
10
Only days after issuing a fresh warning to the Bitcoin (BTC) community, Michael Burry — the Wall Street investor made famous by his bet against the US housing market ahead of the 2008 financial crisis — appears, at least so far, to be proven right.
As of Thursday, Bitcoin was trading near $65,850, extending losses that have dragged the cryptocurrency down nearly 50% from the all‑time highs of $126,000 reached in October of last year.
Bitcoin Could Enter ‘Death Spiral’
In a Substack post, Burry cautioned that the decline could evolve into what he described as a self‑reinforcing “death spiral,” with serious and lasting consequences for firms that have spent the past year aggressively accumulating Bitcoin on their balance sheets.
Burry warned that additional price declines could quickly strain the finances of major corporate holders, forcing asset sales across the crypto ecosystem and triggering widespread destruction of value. He painted what he called “sickening scenarios,” arguing that they are no longer hypothetical.
According to Burry, a further 10% drop in Bitcoin’s price would leave Strategy (previously MicroStrategy) — the largest corporate holder of Bitcoin — “billions of dollars” underwater and effectively shut out of capital markets.
“There is no organic use case reason for Bitcoin to slow or stop its descent,” Burry wrote, emphasizing his belief that the current drivers of demand are insufficient to stabilize prices.
He argued that adoption by corporate treasuries and the growth of crypto‑linked spot exchange‑traded funds (ETFs) may have expanded participation, but they do not provide a permanent floor for valuations or shield the market from severe downside risks.
$50,000 Price Could Push Miners Into Bankruptcy
Burry also warned that continued declines below key price levels could still spill over into other markets. He linked Bitcoin’s recent weakness to sharp moves in gold and silver, suggesting that corporate treasurers have been forced to de‑risk by selling profitable positions in tokenized gold and silver futures.
These products, he noted, are not backed by physical metals and can overwhelm trading in the underlying commodities. Burry described this dynamic as a potential “collateral death spiral,” arguing that liquidations in crypto markets can spill into tokenized metals and then distort physical markets.
The Wall Street veteran estimated that as much as $1 billion worth of precious metals was liquidated at the very end of the month as falling crypto prices forced investors to unwind positions.
Looking ahead, Burry warned that a drop in Bitcoin to $50,000 could have severe consequences. In that scenario, he said, Bitcoin miners would likely be driven into bankruptcy, while tokenized metals futures could “collapse into a black hole with no buyer.”
Featured image from OpenArt, chart from TradingView.com
English (US) ·