Michael Burry, the hedge fund manager best known for calling the 2008 housing crash, has warned that bitcoin’s decline could become more than a crypto-specific selloff, potentially spilling into gold, silver and other linked markets through leverage and systematic trading.
Burry flags a possible “death spiral” in bitcoin
In a Substack post dated Feb. 2, 2026, titled Short Thoughts: February 2, 2026, Burry argued that bitcoin’s move below key levels reinforced its speculative character and weakened the long-running narrative that it behaves like digital gold. If the downturn persists, he said, bitcoin could become “the first asset to suffer a true death spiral.”
Burry said liquidations tied to crypto-linked strategies in late January may have forced the unwinding of as much as $1 billion in gold and silver positions. In his view, algorithmic trading, portfolio de-risking and losses in tokenized precious-metals futures amplified the pressure and transmitted weakness beyond crypto itself.
Risks could extend to metals markets and bitcoin-exposed firms
According to Burry, the problem becomes more serious when institutions use crypto as collateral. If bitcoin keeps falling, margin stress could force the sale of additional assets, weighing on gold and silver futures that are not backed by physical metal. He suggested that physical precious metals may eventually decouple from tokenized or synthetic products, but near-term contagion remains a concern.
He also pointed to companies with large bitcoin exposure, including Strategy Inc., as potentially vulnerable if capital markets tighten during a prolonged decline. Burry wrote that a move toward $60,000 could strain mining operations, trigger reserve sales and deepen a self-reinforcing cycle of selling across multiple assets.
A familiar bearish stance, but not an infallible record
Burry’s skepticism toward bitcoin is not new. In an earlier conversation with The Big Short author Michael Lewis, he called “bitcoin at $100,000” ridiculous, said it was “not worth anything,” and compared it to the tulip mania of the 17th century.
Still, while Burry earned lasting credibility for his 2008 call, several of his later bearish forecasts failed to materialize. The report notes that some of his warnings on global markets, Tesla and the 2023 U.S. stock rally missed the mark. That means his latest warning on bitcoin and cross-market contagion is likely to be treated by investors as a serious risk scenario, but not as a settled outcome.