Michael Burry has warned that Bitcoin falling below important price levels could lead to serious damage and wipe out a lot of value. He shared this warning in a Substack post on Monday. Burry said Bitcoin has been exposed as a purely speculative asset.
This means people mainly buy it hoping its price will rise. He said Bitcoin has failed to behave like a hedge against currency value loss, unlike precious metals. This goes against the long-held belief of Bitcoin supporters who say its fixed supply makes it similar to gold.
Burry made these comments as Bitcoin fell below several key price levels. Over the weekend, it dropped to its lowest level since last year’s tariff-related market stress. On Tuesday, it briefly fell below $73,000. This erased all the gains Bitcoin had made since Donald Trump was re-elected in November 2024.
“Sickening scenarios have now come within reach,” Burry wrote. He warned that if Bitcoin falls another 10%, Strategy Inc., one of the biggest corporate holders of Bitcoin, would be billions of dollars in losses and may find it nearly impossible to raise money from investors.
Why Bitcoin keeps falling
Bitcoin has dropped more than 40% since reaching a record high in early October. Analysts say this fall is due to many reasons, including less money flowing into crypto, weaker trading activity, and a loss of interest from investors. Some crypto traders are also shifting toward prediction markets instead of tokens. Unlike gold and silver, Bitcoin has not risen during times of dollar weakness or global tensions. “There is no organic use case reason for Bitcoin to slow or stop its descent,” Burry said.
Corporate Bitcoin holdings are not permanent
Burry said nearly 200 public companies now hold Bitcoin. While this has helped increase demand, he warned that this support may not last. Companies must report the real-time value of their assets. If Bitcoin keeps falling, risk managers may tell companies to sell. “There is nothing permanent about treasury assets,” he wrote.
Burry said spot Bitcoin ETFs have made Bitcoin even more speculative. They have also increased Bitcoin’s connection with stock markets. He noted that Bitcoin’s correlation with the S&P 500 has recently risen to around 0.50. As losses grow, forced selling could happen quickly.
He also said Bitcoin ETFs have seen some of their biggest one-day money outflows since late November, with three such days occurring in the last 10 days of January.
Even with these warnings, Burry said crypto is still too small to cause major damage to the overall financial system. Bitcoin’s market value is below $1.5 trillion, household exposure is limited, and few companies hold it. Past crypto crashes, including Terra and FTX, did not spread deeply into traditional markets.
Bitcoin’s fall is hitting Gold and Silver
Burry warned that Bitcoin’s decline may already be affecting precious metals. He said companies and traders sold tokenized gold and silver futures to reduce risk after crypto prices fell. These products are not backed by real metal, which can overwhelm physical markets. He described this situation as a “collateral death spiral.”
“It looks like up to $1 billion in precious metals were liquidated at month’s very end as a result of falling crypto prices,” Burry wrote. He warned that if Bitcoin falls to $50,000, miners could go bankrupt and “tokenized metals futures would collapse into a black hole with no buyer.”
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.