Michael Burry, the hedge fund manager famed for predicting the 2008 U.S. housing collapse and portrayed in ‘The Big Short’, has issued a fresh warning about Bitcoin (BTC) amid rising bearishness.
In a February 2 Substack post, Burry cautioned that Bitcoin’s ongoing decline could spark a cascading “death spiral” across cryptocurrency-linked assets, corporate treasuries, and even tokenized precious metals.
He argued that Bitcoin has failed to prove itself as a true safe haven like gold, instead behaving increasingly as a risk asset that moves alongside equities.
Notably, Bitcoin’s correlation with the S&P 500 has recently climbed toward 0.50, reinforcing his view that it is now closely tied to broader market risk. His warning comes as Bitcoin extended losses after breaking below the $80,000 support level.
A key concern is the growing exposure of companies holding large Bitcoin positions on their balance sheets.
In this line, according to Burry, aggressive treasury strategies leave firms vulnerable if major technical levels fail, noting that another 10% decline could push large corporate holders, including Michael Saylor’s Strategy, billions of dollars underwater and potentially cut off access to capital markets.
He also highlighted leverage as a major stress amplifier, describing a feedback loop in which falling crypto prices erode collateral values, trigger forced liquidations, and spill into related assets.
Impact on tokenized assets
According to Burry, this dynamic has already affected tokenized gold and silver, with leveraged positions unwound as crypto collateral weakened, leading to forced selling across both digital assets and tokenized metals.
“Sky-high leverage on these crypto exchanges due to rising metals prices meant that as the crypto collateral fell, the tokenized metals had to be sold. This is a collateral death spiral,” he said.
At the same time, Burry estimated that this process contributed to late-January declines in gold and silver, with up to $1 billion in precious metals liquidated as investors sold profitable positions to cover losses elsewhere.
Looking ahead, he warned that a drop toward $50,000 could trigger widespread miner bankruptcies and freeze the tokenized metals futures market due to a lack of buyers.
Finally, he dismissed the idea that corporate ownership or institutional adoption provides durable price support, arguing that treasury assets can be liquidated quickly under stress.
Burry also expressed skepticism that spot Bitcoin ETFs will stabilize the market, saying they have fueled speculation and further tied Bitcoin to equity market swings. Without a clear organic use case, he warned that liquidation-driven selling could accelerate as losses deepen.
Featured image via Shutterstock
