Michael Burry Warns Bitcoin Crash Could Spark Wider Market Sell-Off

Michael Burry, the investor famous for predicting the 2008 global financial crisis, has issued a fresh warning about bitcoin, suggesting its recent price decline could trigger broader disruptions across financial markets, including gold and silver. In a recent Substack post, Burry argued that the downturn in cryptocurrency prices may already be forcing institutional investors and corporate treasuries to liquidate other assets to cover losses.

Bitcoin’s sharp pullback has raised concerns after the cryptocurrency briefly dropped below $73,000, marking roughly a 40% decline from its recent peak. According to Burry, this sell-off may have contributed to significant liquidations in precious metals at the end of January. He estimated that as much as $1 billion worth of gold and silver positions were sold during that period, potentially as investors rushed to reduce risk by offloading profitable holdings such as tokenized gold and silver futures.

Burry believes the situation highlights what he sees as bitcoin’s fragile foundation. He warned that companies with substantial bitcoin exposure, including firms like Strategy (formerly MicroStrategy), could face serious financial stress if prices continue to fall. In his view, bitcoin lacks an “organic use case” that would naturally stabilize demand, making further downside likely.

The investor went even further, cautioning that a drop toward $50,000 could push bitcoin mining companies toward bankruptcy while severely damaging markets tied to tokenized commodities. He described a scenario in which tokenized metals futures could effectively lose liquidity, with sellers unable to find buyers in a rapidly deteriorating market.

Burry also dismissed the long-standing narrative of bitcoin as a digital safe haven or reliable alternative to gold. He argued that institutional and corporate treasury holdings do not provide permanent price support and can quickly reverse during periods of market stress. While recent gains were fueled by the launch of spot bitcoin ETFs and rising institutional interest, Burry sees these as temporary catalysts rather than evidence of sustainable adoption.

Although his bearish outlook is controversial, Burry’s past track record has made investors pay attention. His latest warning adds to growing concerns that a prolonged bitcoin downturn could spark another wave of forced selling across multiple asset classes.