Prominent investor and "Big Short" figure Michael Burry has issued a stark new warning, stating that Bitcoin's recent breach below multiple critical technical levels could set off a chain reaction, leading to massive value evaporation and "contaminating" the broader financial markets. Burry pointed out that Bitcoin has proven to be a "purely speculative asset," failing to genuinely establish itself as a hedge against currency devaluation like precious metals such as gold and silver. This contradicts the long-held narrative by supporters that its "fixed supply makes it comparable to gold." Recently, Bitcoin's price has continued to decline, falling over the weekend to its lowest level since last year's "tariff shock" and briefly dropping below the $73,000 mark on Tuesday, erasing all gains made since Trump's re-election in November 2024. Data shows Bitcoin hit a low of $72,949.94 in the past 24 hours, its lowest point in 15 months, before subsequently rebounding above $76,000.
Burry wrote, "The nauseating scenario is now within reach." He warned that if Bitcoin falls another 10%, one of the most aggressive corporate treasury holders of Bitcoin, Strategy (MSTR.US), could face billions in unrealized losses, with its access to financing potentially almost completely cut off by the market. Bitcoin has fallen more than 40% since hitting its all-time high last October. Analysts believe the primary reasons for this decline are the disappearance of fund inflows, shrinking market liquidity, and a weakening appeal of the macro narrative. Additionally, some crypto-native traders are shifting towards prediction markets and event-betting platforms, cooling enthusiasm for token economies.
Notably, Bitcoin has not benefited from a weaker US dollar or rising geopolitical risks in the way traditional safe-haven assets have. Conversely, gold and silver have both recently hit record highs, further undermining Bitcoin's core "inflation trade" narrative. Alex Thorn, Head of Research at Galaxy Digital, also noted that Bitcoin is structurally weak and lacks short-term catalysts, potentially leading to a further decline towards its 200-week moving average near $58,000.
Meanwhile, selling pressure is rapidly spreading across the crypto market. Ethereum and Solana fell by as much as 9.6% and 7.1% respectively in the past 24 hours, with their prices dropping to $2,118 and $97.10, now below their levels from the market bottom last April and representing drawdowns of 57% and 67% from their 2025 highs. Data from CoinGlass shows that liquidations in the crypto market over the past 24 hours reached a staggering $659 million, with Bitcoin long positions accounting for approximately $234 million in liquidations, being the primary source.
Burry further warned that the advent of Bitcoin ETFs has not only reinforced its speculative nature but also increased its correlation with the stock market. He pointed out that Bitcoin's correlation with the S&P 500 has recently approached 0.50. Concurrently, spot Bitcoin ETFs experienced their largest single-day outflow since last November at the end of January, with three major withdrawals occurring within just 10 days.
Despite this, some market views suggest that the crypto asset class's size remains insufficient to trigger a systemic financial crisis. Bitcoin's current market capitalization is below $1.5 trillion, household exposure is limited, and corporate adoption is still relatively narrow, suggesting the wealth effect might be contained. However, Burry believes that if Bitcoin continues to break below key levels, it could force corporate risk management departments to sell assets, potentially spilling over into derivative markets like "tokenized precious metal futures."
He suggested that the recent pullback in gold and silver is partly due to the crypto market decline forcing speculative capital to deleverage, leading to a "collateral death spiral." He warned that if Bitcoin falls to $50,000, mining companies could face widespread bankruptcies, and tokenized metal futures lacking physical backing would "plunge into a black hole with no buyers." Simultaneously, prediction market sentiment has undergone a sharp reversal. Data from Decrypt's platform Myriad shows traders currently assign a 75% probability that Bitcoin will first fall to $69,000, whereas just a week ago, the market widely believed the probability of Bitcoin reaching $100,000 was over 70%.
In Burry's view, Bitcoin's decline is not merely a routine correction but could mark the beginning of "value destruction" following the bursting of a speculative bubble.
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