The investor who has been right about the 2008 crash within the housing market has made an announcement that warns about the recent downturn of Bitcoin.
The cryptocurrency has fallen by almost 40% of its worth since October, and Burry warns that this fall may give rise to a self-feeding death spiral.
In his most recent article, he points to the threat of a further decline in the prices of significant corporate holders and miners. Should the price of Bitcoin decline by another 10%, Burry forecasts that it will have serious financial implications for both.
The price slump and fallout of Bitcoin
The price of Bitcoin has declined to below 73,000 in the recent past, the lowest in the history of the cryptocurrency since Donald Trump came back to the white house in 2025.
Analysts explain the depreciation by the poor market flows and interest from investors. Burry, however, sees more trouble in store.
Bitcoin has not been able to gain traction even after being adopted by corporate treasuries and the introduction of exchange-traded funds (ETFs) into the market.
Burry thinks that the price of Bitcoin might keep declining without any natural application or a basis on which it can revive itself.
The central issue that Burry is concerned with is the close to 200 publicly traded companies that possess Bitcoin.
Such companies may be under intense pressure if the price of Bitcoin keeps going down.
When the value of their Bitcoin wallets declines, the financial documents would include the loss, which would drive risk managers to dispose of their assets.
This may further deteriorate the price drop as selling begets more selling, forming a vicious circle.
Bankruptcy risk among miners
The scenario is even worse when Bitcoin drops to approximately $50,000. This would drive miners to bankruptcy, according to Burry.
These organizations that were largely dependent on the price of Bitcoin to stay profitable would not withstand a massive decrease in the price of Bitcoin.
With an increasing number of miners going bankrupt, the market may be exposed to a significant liquidity crisis, which would further destabilize the financial situation in the crypto sector in general.
Burry also warns about tokenized assets associated with Bitcoin, more specifically, tokenized gold and silver futures.
He asserts that the continued liquidation of these assets is already impacting the general commodities market.
The vulnerability of the crypto market is being bled into the traditional markets, with investors selling tokenized precious metals to offset losses on declining crypto prices.
This has caused a decrease in the real metals market, and a ripple effect is likely to get it worse in case Bitcoin moves in the downwards way.
Contagion across markets
Burry demonstrates the influx of spot Bitcoin ETFs as a driving factor in the rise in correlation between Bitcoin and the stock market.
As the correlation of Bitcoin and S&P 500 is currently 0.50, Burry cautions that the decrease in prices could cause the stock market to fall further, and as a result, the price of Bitcoin will go down.
Also, the Bitcoin ETFs experienced massive withdrawals, with clients withdrawing their money following the poor performance of the token.
This may further accelerate the current sell-off, as institutional shareholders seek to protect themselves against further losses.
An unpromising future for Bitcoin
According to the analysis by Burry, Bitcoin has a dark future because this decline in prices puts a strain on the corporate holders as well as miners and the entire crypto market.
With a further drop in the value of Bitcoin, the market will be in a death spiral, and businesses and miners will have to sell their assets.
The closer Bitcoin is correlated to the traditional markets, the higher the probability of contamination.
All these things being said, investors are keeping a close eye on the next steps of Bitcoin in the hope that the worst is still behind.
The post Bitcoin’s Slump Could Trigger “Death Spiral” and Contagion, Warns Michael Burry first appeared on Coinfea.