Michael Burry Warns BTC Crash Could Deepen Into a Death Spiral; More Declines Could Mean Bankruptcy For Miners

Michael Burry, known for predicting the 2008 global financial crisis, cautioned in a Substack post this week that free-falling Bitcoin prices could trigger a self-reinforcing 'death spiral', causing lasting negative effects on corporations that have been buying the digital assets for years.

Burry said Bitcoin, which is down 40% since its October peak, is now exposed as a completely speculative asset and does not qualify as a debasement hedge like gold or silver. The investor's warning comes as Bitcoin fell below $73,000 (£53,261) on Tuesday, marking the lowest level since US President Donald Trump assumed office a year ago.

If BTC prices fall further, it could significantly affect the balance sheets of major holders, trigger a sell-off across the crypto ecosystem, and ultimately lead to value destruction.

'Sickening scenarios have now come within reach,' Burry noted, adding that if BTC declines by another 10%, Michael Saylor's MicroStrategy, the largest corporate holder of the digital coin, would be billions in the red and could 'find capital markets essentially closed'. If the price crash does not slow, it could push Bitcoin miners towards bankruptcy.

Market experts believe a slump in inflows, deteriorating liquidity and a loss of macroeconomic appeal are among the factors driving the bitcoin slump. BTC also did not respond to developments such as a weakening US dollar or geopolitical risk, unlike gold and silver, which rallied to record highs.

Corporate Adoption, ETFs Not Enough to Drive up BTC Prices

'There is no organic use case reason for Bitcoin to slow or stop its descent,' Burry wrote, adding that BTC adoption by nearly 200 public corporations and ETFs is not sufficient to drive up prices forever or prevent major consequences if it declines significantly.

He added that spot ETFs have only boosted Bitcoin's speculative nature, while ramping up the token's correlation with stock markets. He shared that BTC's correlation with the S&P 500 has reached 0.50, and liquidations could be triggered aggressively when loss positions grow.

Bitcoin ETFs are also seeing record single-day outflows, the highest since late November. Burry warned that if the cryptocurrency falls below key trading levels, it could affect broader markets.

BTC Crash Behind Metals Price Correction

The major decline in gold and silver prices, following a surge to unprecedented levels, could be linked to the Bitcoin crash, Burry said. He argued that corporations had to de-risk by selling profitable positions in tokenised gold and silver futures.

Tokenised metal futures are not backed by physical metals and can overwhelm trading in the physical market, causing 'a collateral death spiral', he added, noting that up to $1 billion (£729.6 million) in precious metals was liquidated at 'month's very end' due to falling crypto prices.

Burry warned that if Bitcoin fell to $50,000 (£36,480), miners could go bankrupt, while 'tokenised metals futures would collapse into a black hole with no buyer'.

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