Michael Burry Issues Warning: $1B Catastrophe Looms in Precious Metals if Bitcoin Continues to Decline

Michael Burry, famous for his role in "The Big Short," has raised alarms that Bitcoin's ongoing bear market could lead to a disastrous sell-off of as much as $1 billion in gold and silver.

Key Takeaways

Michael Burry warns Bitcoin's ongoing decline could trigger a $1 billion sell-off in precious metals.
Bitcoin has decreased 3.17% over 24 hours and 14.44% for the week, trading at $76,362.
If BTC drops another 10%, firms like Michael Saylor's Strategy could face significant losses.
Burry believes there is no substantial reason for Bitcoin to stop declining, suggesting risk managers may advise selling.

Michael Burry BTC fall

In a recent Substack post, Burry noted, “It seems that approximately $1 billion in precious metals were liquidated at the end of the month due to falling cryptocurrency prices.”

He pointed out that Bitcoin is often viewed as a speculative asset, which, combined with its correlation to precious metals, has created what he describes as “sickening scenarios” that may soon unfold.

Over the past 24 hours, Bitcoin has decreased by 3.17%, contributing to a 14.44% drop over the week as the broader cryptocurrency market also declined. As of Wednesday morning in Asia, Bitcoin is trading at $76,362.

Burry's predictions coincided with Bitcoin reaching lows of $72.8K. High-profile bearish predictions like his can accelerate capital rotation away from risk assets.

With Bitcoin already down 17.74% for the month, these warnings further exacerbate negative market sentiment and deter potential buyers looking to purchase on dips.

Michael Saylor's Strategy and Institutional Risk

According to a report from Bloomberg on Wednesday, Burry cautioned that if Bitcoin drops another 10%, Michael Saylor's Strategy – the largest corporate BTC treasury holder with a stash of 713,502 Bitcoin – could incur millions in losses.

He indicated that the strategy would face an “existential crisis” if Bitcoin were to plunge to $60,000, suggesting that "capital markets would essentially close."

Other Bitcoin holders might expect losses in the range of 15%-20%, prompting increased caution among risk managers, Burry stated.

Following Bitcoin’s downturn, Strategy has become unprofitable, facing an unrealized loss exceeding $900 million, as reported by Cryptonews earlier this week. Despite Bitcoin falling below $75K, the company purchased an additional 855 BTC on Monday.

The Risk of Continued Decline and Managerial Responses

Michael Burry asserts that there is no fundamental reason for Bitcoin to halt or reverse its decline.

He highlighted that, unlike silver or gold, Bitcoin has not responded effectively to external factors, such as geopolitical tensions. Holding Bitcoin in corporate treasuries and Bitcoin spot ETFs is insufficient to stabilize its price.

Burry mentioned that nearly 200 public companies are invested in Bitcoin. He warned that “there is nothing permanent about treasury assets.”

He noted that Bitcoin ETFs have been experiencing significant outflows, with some of the largest occurring in the last ten days of January, particularly since late November.

Furthermore, Burry cautioned that if Bitcoin’s value continues to decrease, corporate risk managers will likely begin advising companies to liquidate their Bitcoin holdings.