Michael Burry Warns Bitcoin Crash Triggering Wider Financial Deleveraging, Gold and Silver at Risk

Michael Burry, the renowned investor famously depicted in “The Big Short” for his prescient prediction of the 2008 financial crisis, has issued a stark warning: Bitcoin’s recent dramatic price plunge is initiating a severe chain reaction across global financial markets. This deleveraging cascade, he cautions, is even impacting traditionally safe-haven assets like gold and silver, which are being liquidated by institutional investors to cover losses in the volatile crypto space.

The Ripple Effect: Crypto Losses Force Precious Metal Sales

In a recent Substack post on Monday, Burry elaborated on the unfolding crisis. As the cryptocurrency market experiences a significant downturn, numerous institutional investors and corporate treasurers find themselves in a precarious position. To mitigate mounting losses or address urgent liquidity demands, they are reportedly being compelled to divest other profitable assets from their portfolios, thereby igniting a widespread deleveraging cycle.

“Due to falling cryptocurrency prices, it appears that up to $1 billion in precious metals were dumped by month-end,” Burry wrote.

Burry attributes the synchronized decline of gold and silver observed at the close of January primarily to collective selling pressure from speculators and corporate entities. As their Bitcoin positions incurred deeper losses, these players urgently offloaded profitable tokenized gold and silver futures to reduce overall risk exposure. This strategic maneuver, effectively “selling strength to cover weakness,” directly undermined the performance of precious metals.

Bitcoin’s Fragility and Grim Outlook

Bitcoin’s price briefly dipped below $73,000 early today, marking a substantial 40% correction from its recent peak. According to Burry, this sharp downturn has exposed the inherent fragility of the cryptocurrency’s underlying structure. He warns that such volatility poses a significant threat to companies with substantial Bitcoin holdings, citing firms like MicroStrategy (MSTR) as particularly vulnerable.

Burry’s outlook for Bitcoin’s future is unequivocally pessimistic.

“From a fundamental use demand perspective, I see no reason for Bitcoin’s decline to slow or stop,” he stated emphatically.

He further cautioned that a continued descent, particularly if Bitcoin breaches the critical $50,000 threshold, could trigger widespread bankruptcies among mining companies. Moreover, he predicts that the tokenized precious metals futures market itself could face a complete collapse, transforming into a “black hole with no buyers.”

Dismantling the “Digital Gold” Narrative

The investor famous for spotting the “big short” dismisses the widely propagated narrative of Bitcoin as a “digital safe haven” or a viable “gold substitute.” Burry firmly believes that “corporate reserve assets are not permanent amulets.” He contends that the widespread expectation for corporate and institutional adoption—integrating Bitcoin into balance sheets to provide long-term price support—is fundamentally misguided and unsustainable.

In Burry’s assessment, Bitcoin’s previous bull market was an artificial construct, fueled almost entirely by the introduction of spot ETFs and a surge in institutional buying. He characterizes these as mere “temporary funding frenzies” rather than indicators of genuine, widespread adoption. Ultimately, Michael Burry maintains that Bitcoin remains a speculative commodity, fundamentally lacking any intrinsic value anchor.