Michael Burry Sounds Alarm on Bitcoin's Plunge and Its Market-Wide Ripple Effects
Renowned hedge fund manager Michael Burry, famous for accurately predicting the 2008 US housing market collapse, has issued a stark warning about Bitcoin's recent downturn. Burry suggests that the dramatic fall in the world's leading cryptocurrency could trigger significant repercussions across financial markets, with a particular focus on precious metals like gold and silver.
Bitcoin's Steep Decline to Multi-Month Lows
Bitcoin has plummeted to its lowest valuation since President Donald Trump assumed office in January 2025. The cryptocurrency briefly dipped below the critical $72,000 threshold, a price point not observed in nearly fifteen months. On Wednesday, trading in New York saw Bitcoin's price sink to $71,739, reflecting a staggering decline of almost 17% in 2026. This downturn contributed to the broader crypto market shedding over $460 billion in value during the preceding week.
Burry's Analysis: Crypto Losses Forcing Asset Liquidation
In a Substack post dated 2 February, Michael Burry elaborated on his concerns. He posited that Bitcoin's sharp decline may have pressured institutional investors and corporate treasurers to offload positions in other asset classes to cover their mounting losses. Highlighting the notable dip in gold and silver prices at the end of January, Burry remarked, "It looks like up to $1 billion in precious metals were liquidated at the month’s very end as a result of falling crypto prices."
On Tuesday, Bitcoin fell below $73,000, marking an approximate 40% drop from its recent peak of over $126,000 in October 2025. Burry argues that this plunge exposes Bitcoin's inherent vulnerabilities, challenging its narrative as a digital safe haven and a viable alternative to gold.
Dire Predictions and Warnings from Burry and Analysts
The hedge fund manager, whose story was depicted in the film The Big Short, issued several alarming predictions. He warned that Bitcoin mining companies could face bankruptcy if prices fall to $50,000. Additionally, Burry cautioned that the market for tokenized metals futures might "collapse into a black hole with no buyer." He dismissed the notion that institutional or corporate holdings would offer sustained support, stating that treasury assets are not permanent.
Several financial analysts have echoed Burry's grim outlook. According to Bloomberg, Bitcoin could experience further significant declines. Data from the prediction platform Polymarket indicates an 82% probability that Bitcoin will drop to $65,000 in 2026.
Bloomberg analyst Mike McGlone added to the concerns, suggesting that 2026 could witness a financial crisis reminiscent of 2008. McGlone projected that Bitcoin might lose up to 87% of its value, potentially falling to $10,000.
Crypto Market Sentiment and Underlying Factors
Bloomberg reports that sentiment in the cryptocurrency market has been under strain since October 2025, when an unexpected weekend crash led to billions of dollars in liquidations. The total crypto market capitalization now stands at approximately $2.5 trillion, a substantial decrease from its peak valuation of over $4 trillion in October.
Analysts point to several factors driving Bitcoin's decline, despite expectations that it would benefit from ongoing geopolitical tensions and dollar weakness—conditions that have propelled gold and silver to record highs. Key drags include fading inflows into Equity Traded Funds (ETFs) and tighter liquidity conditions.
Current Status of US Gold and Silver Markets
According to Reuters, US gold prices saw a marginal increase of over 1%, hovering near a week's high. Spot gold also rose by 1.1% to $5,016.89 per ounce as of 0039 GMT. Bullion had previously reached a record high of $5,594.82 last Thursday.
Spot silver climbed 2.1% to $89.88 per ounce, following its record high of $121.64 last week. Spot platinum increased by 2.1% to $2,272.55 per ounce after hitting an all-time high of $2,918.80 on 26 January, while palladium added 0.7% to $1,787.55.
