BlockBeats News, February 4th, Michael Burry, the renowned American ‘Big Short’ investor, warned that Bitcoin has plummeted by 40%, and if the decline continues, it could cause lasting damage to companies that have heavily accumulated this asset over the past year. He believes that Bitcoin has been proven to be a purely speculative asset and has failed to become a hedge tool like precious metals.
Michael Burry stated on Monday that if Bitcoin drops another 10%, the most aggressive Bitcoin treasury companies, like Strategy, will incur losses of billions of dollars and will essentially be unable to access the capital markets. He warned that a Bitcoin decline could trigger “catastrophic consequences,” spreading to broader markets and leading to a “collateral death spiral” in tokenized metal futures. As this warning was issued, Bitcoin continued to plummet on Tuesday, briefly falling below $73,000, erasing all gains since Trump’s reelection in November 2024. Since hitting its all-time high in early October, this digital currency has fallen by over 40%.
Burry added that the emergence of spot ETFs has only exacerbated Bitcoin’s speculative nature, while also increasing the token’s correlation with the stock market. Bitcoin’s correlation with the S&P 500 index recently approached 0.50. In theory, when loss positions start to grow, liquidation will be actively initiated. Since late November, Bitcoin ETFs have been setting some of the largest single-day outflow records, with three occurrences in the last 10 days of January. This trend indicates that institutional investors’ confidence in Bitcoin is waning, and ETFs, originally seen as a tool to expand Bitcoin adoption, may instead accelerate selling during a market downturn.
Burry pointed out that the decline of cryptocurrencies is partially attributable to the recent collapse of gold and silver, as corporate treasurers and speculators need to reduce risk by selling profitable positions in tokenized gold and silver futures. If Bitcoin falls to $50,000, miners will go bankrupt, and “tokenized metal futures will collapse into a black hole with no buyers.”
