Michael Burry’s Bitcoin Warning: Crypto Crash Could Drag Down Gold and Silver Markets

TLDR

• Michael Burry warned that bitcoin’s drop below $73,000 may have forced institutions to sell up to $1 billion in gold and silver to cover crypto losses
• Burry predicts bitcoin mining firms could face bankruptcy if prices fall to $50,000, potentially triggering a market collapse
• The investor argues bitcoin has failed as a digital safe haven and alternative to gold, calling it speculative without inherent value
• Burry pointed to late-January liquidations in tokenized precious metals futures as crypto-linked trading strategies unwound
• Companies with large bitcoin holdings like Strategy (MSTR) could face pressure if capital markets tighten during sustained price declines

Michael Burry, the investor who predicted the 2008 financial crisis, issued a warning about bitcoin’s recent price decline. He said the drop could create problems across multiple markets, especially in gold and silver.

In a Substack post on Monday, Burry stated that bitcoin’s fall may have forced institutional investors to sell other assets. He believes they needed to cover losses from crypto holdings.

Burry estimated that up to $1 billion in precious metals were sold at the end of January. He pointed to the timing of gold and silver price drops as crypto markets fell. Bitcoin briefly dropped below $73,000 on Tuesday, down 40% from recent highs.

The investor said speculators and corporate treasury managers rushed to reduce risk. They sold profitable positions in tokenized gold and silver futures to offset crypto losses.

Burry warned that companies holding large amounts of bitcoin could face serious trouble. He specifically mentioned Strategy (MSTR) as a firm that could be affected. The pressure would increase if bitcoin prices continue falling.

Mining Companies at Risk

If bitcoin drops to $50,000, Burry said mining firms could go bankrupt. He also warned that the market for tokenized metals futures could collapse. This would happen if there are no buyers left in the market.

Burry argued that bitcoin has not lived up to its promise. Many supporters call it a digital safe haven similar to gold. He said this claim has proven false.

The investor dismissed the idea that corporate holdings would support bitcoin prices long-term. He stated there is nothing permanent about treasury assets. Companies can and will sell when needed.

Bitcoin’s recent bull run was driven by spot ETF launches and institutional interest. Burry sees these as temporary factors rather than signs of real adoption. He believes bitcoin remains speculative without any inherent value.

Cross-Market Fallout Concerns

Burry pointed to algorithmic trading and portfolio de-risking as factors. These amplified losses in tokenized precious metals futures. The selling happened as traders needed to cover crypto losses.

Burry said sustained declines could force companies to sell bitcoin reserves. This would create a feedback loop of selling across multiple asset classes. Physical metals might eventually separate from this pattern, but tokenized markets remain at risk.

Bitcoin briefly dropped to $72,863 during a recent low point. The price has since recovered somewhat but remains well below recent peaks. Burry warned that bitcoin could become “the first asset to suffer a true death spiral” if declines continue.

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