「The Big Short」 Michael Burry: Bitcoin has plunged by 40%, and if it continues to fall, it could have 'catastrophic' consequences for Bitcoin treasury companies and tokenized precious metals.

BlockBeats News, February 4th, American renowned "Big Short" Michael Burry warned that Bitcoin has plummeted by 40%, and if it continues to fall, it may cause lasting damage to companies that have accumulated large amounts of this asset over the past year. He believes that Bitcoin has been proven to be a purely speculative asset and has failed to become a hedge tool like precious metals.

Michael Burry wrote on Monday that if Bitcoin falls another 10%, the most aggressive Bitcoin treasury company, Strategy, will suffer losses of billions of dollars and will be essentially unable to enter the capital market. He warned that a Bitcoin decline could trigger "catastrophic consequences," including spilling over into a broader market and leading to a "collateralized metal futures death spiral." As this warning was issued, Bitcoin continued to plunge on Tuesday, falling below $73,000 at one point, erasing all gains since Trump's reelection in November 2024. Since hitting a record high in early October, this digital currency has fallen by over 40%.

Burry added that the emergence of spot ETFs has only exacerbated Bitcoin's speculative nature while also increasing the token's correlation with the stock market. The correlation between Bitcoin and the S&P 500 index recently approached 0.50. In theory, when loss positions begin to grow, liquidation will actively kick in. Since late November, Bitcoin ETFs have been setting some of the largest single-day outflow records, with three occurrences in the last 10 days of January. This trend indicates that institutional investors' confidence in Bitcoin is waning, and ETFs, originally seen as a tool to expand Bitcoin adoption, may instead accelerate selling during market downturns.

Burry pointed out that the decline in cryptocurrencies is partly due to the recent collapse of gold and silver, as corporate treasurers and speculators need to reduce risk by selling profitable positions in tokenized gold and silver futures. If Bitcoin falls to $50,000, miners will go bankrupt, and "collateralized metal futures will collapse into a buyer-less black hole." (Wall Street News)