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「The Big Short」 Michael Burry: Bitcoin has plunged by 40%, and if it continues to fall, it may have 'catastrophic' consequences for the Bitcoin Treasury and tokenized metal markets

2026.02.04 10:39:59

**Michael Burry Warns Bitcoin’s 40% Plunge Risks Catastrophic Spillover, Calls It Purely Speculative** On February 4, renowned American "Big Short" investor Michael Burry warned Bitcoin’s 40% drop could inflict lasting damage on companies that heavily accumulated the asset over the past year. He argued Bitcoin has proven to be a purely speculative asset—failing to function as a hedge like precious metals. Burry noted Monday that a further 10% Bitcoin decline would leave the most aggressive crypto treasury firms (like Strategy) with billions in losses and effectively locked out of capital markets. He flagged the drop could trigger "catastrophic consequences," spreading to broader markets and sparking a "collateral death spiral" in tokenized metal futures. As the warning hit, Bitcoin extended its slide Tuesday, briefly falling below $73,000—erasing all gains since Donald Trump’s 2024 reelection in November. Since hitting its all-time high in early October, the digital currency has dropped more than 40%. Burry added that spot ETFs have only amplified Bitcoin’s speculative nature, while boosting its correlation with the S&P 500 (recently approaching 0.50). Theoretically, growing losses would trigger active liquidations. Since late November, Bitcoin ETFs have set some of their largest single-day outflow records—including three instances in the final 10 days of January. This trend signals waning institutional confidence; ETFs, once seen as a tool to expand Bitcoin adoption, may instead accelerate selling during downturns. Finally, Burry pointed out crypto’s decline is partly tied to recent gold and silver collapses: Corporate treasurers and speculators are cutting risk by selling profitable positions in tokenized gold/silver futures. If Bitcoin falls to $50,000, miners would face bankruptcy, and "tokenized metal futures will collapse into a black hole with no buyers."
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