Investors should pay close attention to recent warnings from Michael Burry—the famed investor who predicted the 2008 subprime mortgage crash—regarding Bitcoin’s precarious position amid surging market volatility. Speaking to Bloomberg, Burry warns that Bitcoin’s recent 40% drop since October confirms an identity crisis: it has failed as a risk-hedging asset like gold and instead behaves purely as a speculative instrument. He argues there is no organic reason to expect the decline to slow or stop. Spot Bitcoin ETFs, he claims, have amplified its speculative nature and deepened its correlation with equities—now nearing 0.50 with the S&P 500—and triggered massive outflows. Burry forecasts a further 10% drop could push Strategy Inc., the world’s largest crypto fund, into multi-billion-dollar losses, cutting off its capital market access. Continued declines may bankrupt miners and trigger fire sales by over 200 publicly listed firms holding Bitcoin on their balance sheets—sparking an unpredictable, cascading sell-off. He even links Bitcoin’s slump partly to the recent collapse in gold and silver prices, as large portfolios liquidate profitable positions to de-risk.
Michael Burry Warns Bitcoin Faces a ‘Death Spiral’
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