BlockBeats news: On February 4, renowned U.S. "big short seller" Michael Burry warned that Bitcoin has plummeted by 40%, and further declines could cause lasting damage to companies that have accumulated large amounts of the asset over the past year. He believes that Bitcoin has proven to be purely a speculative asset and has failed to serve as a hedge, unlike precious metals.
On Monday, Michael Burry posted that if Bitcoin were to drop another 10%, the most aggressive Bitcoin-focused financial firm, Strategy, would suffer losses in the billions of dollars and would essentially be unable to access capital markets. He warned that a Bitcoin price decline could lead to "catastrophic consequences," including spilling over into broader markets and triggering a "margin death spiral" in tokenized metal futures. This warning came as Bitcoin continued to plummet on Tuesday, briefly falling below $73,000 and erasing all gains since Donald Trump's re-election in November 2024. Since hitting a record high in early October, this digital currency has fallen more than 40%.
Burry added that the emergence of spot ETFs has only intensified the speculative nature of Bitcoin and also increased the token's correlation with the stock market. Recently, Bitcoin's correlation with the S&P 500 index has approached 0.50. Theoretically, when losing positions begin to grow, liquidations will actively kick in. Since late November, Bitcoin ETFs have recorded some of the largest single-day outflows, with three of these occurring in the final 10 days of January. This trend suggests that institutional investors' confidence in Bitcoin is waning. ETFs, originally seen as tools to expand Bitcoin adoption, may instead be accelerating sell-offs during market downturns.
Burry pointed out that the decline in cryptocurrencies is partially responsible for the recent crash in gold and silver prices, as corporate treasurers and speculators needed to reduce risk by selling profitable positions in tokenized gold and silver futures. If Bitcoin falls to $50,000, miners will go bankrupt, and "tokenized metal futures will collapse into a black hole with no buyers." (Wall Street Journal Insights)