Big Short Michael Burry Issues Dire Warning on Bitcoin Price Crash Risks

Michael Burry, the “Big Short” investor recognized for predicting the 2008 financial crisis, has sounded an alarm on  Bitcoin price crash. He cautions that Bitcoin’s sharp fall could trigger a “death spiral,” severely impacting Bitcoin treasury companies, gold, silver, and the broader financial markets.

Michael Burry Reveals How Bitcoin Price Could Crash Financial Markets?

Michael Burry argues that Bitcoin price crash has increased beyond 40% from its recent peak, falling to a low of $72,897. He described the asset as a purely speculative instrument rather than as digital gold or a hedge against inflation and currency debasement.

Further losses, he said, could rapidly strain the balance sheets of more than 150 Bitcoin treasury companies, triggering a crypto market crash and domino effect on global stock markets.

“There is no organic use case reason for Bitcoin to slow or stop its descent,” Burry added. Massive outflows from spot Bitcoin ETFs indicates bearish sentiment among institutional investors.

Unlike gold and silver, BTC has failed to respond to typical upside drivers such as US dollar weakness or geopolitical risk. Notably, Bitcoin reacted to Monday’s ISM Manufacturing PMI data release similar as stocks and rose above $79K, crypto experts called it “wild.”

Michael Burry Shares “Sickening Scenarios” if Bitcoin Selloff Deepens

“Sickening scenarios have now come within reach,” Michael Burry claims. Bitcoin price crash below $70K could lead to $4 billion in unrealized losses for Strategy (NASDAQ: MSTR), the world’s largest corporate Bitcoin holder. Additional drops, he said, would push Bitcoin miners toward bankruptcy.

His comments come as Bitcoin tumbled below $73K to its lowest since President Donald Trump retook the White House. Experts including veteran trader Peter Brandt predicted BTC could fall to $54K. Analysts have cited reasons including fading inflows, declining liquidity, macro stress, and Trump nominating hawk Kevin Warsh as Fed Chair.

If BTC price continues to fall, risk managers will start advising their clients to sell, Burry warned. This is not Michael Burry’s first critical take, as he previously compared Bitcoin to past bubbles. However, the latest analysis highlights new concerns regarding corporate exposure and cross-asset contagion in the current market cycle.

BTC Crash Risks to Gold and Silver

While Michael Burry warns of a death spiral, the crypto market’s exposure remains small to trigger broad contagion. Notably, Bitcoin’s almost $1.5 trillion market cap, low household exposure, and limited corporate adoption suggest any impact would likely be mitigated.

But as Bitcoin price continues to crash below certain key support levels, Burry predicts worsening conditions in the financial markets. He claims the fall in the crypto market is partly to blame for the recent collapse in gold and silver prices. Institutions and corporate treasuries book profits worth billions in tokenized gold and silver futures to cover crypto-related margin calls and losses.

He added that these tokenized metal futures are not backed by physical metals and may exacerbate trading in physical metals. “Tokenized metals futures would collapse into a black hole with no buyer,” he said.