Bitcoin Decline Ripple Effects: Michael Burry Issues Stark Warning

Bitcoin’s recent sharp decline has reignited market fears, especially after The Big Short’s Michael Burry warned that the sell-off could trigger ripple effects across gold, silver, and broader financial markets.

Michael Burry Raises Alarm Over Bitcoin’s Fall

Michael Burry, a US hedge fund manager who is well-known for foreseeing the US housing crisis in 2008, has now raised concerns regarding Bitcoin. Burry thinks that the recent decline in the biggest and most well-known cryptocurrency could have an impact on other markets, especially those for gold and silver.

Since US President Donald Trump took office in January 2025, Bitcoin has dropped to its lowest point. For a brief period, the price fell below the $72,000 threshold, which was last reached over 15 months ago.

Bitcoin Hits Multi-Month Lows

The token’s price fell to $71,739 in New York on Wednesday, and it is already down around 17% in 2026. The previous week, the value of the entire cryptocurrency market dropped by more than $460 billion.

Burry stated in a Substack article on February 2 that institutional investors and corporate treasurers might have been forced to sell their investments in other assets in order to cover losses due to the cryptocurrency’s drop.

Impact on Gold and Silver Markets

He went on to say, “It appears like up to $1 billion in precious metals were liquidated at the month’s very end as a result of declining crypto prices,” referring to the decline in the price of gold and silver at the end of January.

Bitcoin dropped roughly 40% from its recent highs of over $126,000 in October 2025 to below $73,000 on Tuesday. Burry claims that this decline reveals the currency’s shaky base and that it has fallen short of its promises as a digital safe haven and gold substitute.

Warnings of Further Downside

The hedge fund manager in The Big Short warned that the market for tokenized metals futures may “sink into a black hole with no buyer” and that mining companies might go bankrupt if prices drop to $50,000. He dismissed the notion that corporations or institutional holdings would sustain the currency over time, claiming that treasury assets are not permanent.

Burry’s cautions have been repeated by a number of other analysts. The biggest cryptocurrency might decline even further, according to Bloomberg. According to the analysis, there is an 82% likelihood that Bitcoin would drop to $65,000 in 2026, citing data from prediction platform Polymarket.

Comparisons to the 2008 Financial Crisis

Additionally, Bloomberg analyst Mike McGlone cautioned that 2026 might resemble the 2008 financial crisis. According to McGlone, Bitcoin might collapse to $10,000, losing 87% of its value.

Since October 2025, when a sudden weekend fall led to billions of dollars in liquidations, the sentiment in the cryptocurrency market has been under pressure, according to Bloomberg. The cryptocurrency market’s value has decreased from its October valuation of over $4 trillion to over $2.5 trillion.

Why Bitcoin Isn’t Acting as a Safe Haven

According to reports, Bitcoin’s decline occurs in spite of expectations that it would profit from the ongoing geopolitical tensions and weakening dollar—the same factors that have caused gold and silver to reach all-time highs. Analysts have identified tighter liquidity and declining ETF inflows as some of the main drivers.

US gold was up just over 1%, according to Reuters, and was trading close to a week’s high. As of 0039 GMT, spot gold was up 1.1% at $5,016.89 an ounce. Last Thursday, the price of gold hit a record high of $5,594.82.

Precious Metals Performance

The price of spot silver increased 2.1% to $89.88 per ounce. Last week, it hit a record high of $121.64. After reaching an all-time high of $2,918.80 on January 26, spot platinum was up 2.1% to $2,272.55 per ounce, while palladium increased 0.7% to $1,787.55.

Frequently Asked Questions

1. What worries Michael Burry about the current drop in Bitcoin?

According to Michael Burry, the decline of Bitcoin would compel institutional investors to sell other assets in order to recoup losses, which would have an impact on markets for tokenized commodities, gold, and silver.

2. How might the decline of Bitcoin affect the price of gold and silver?

Burry claims that investors selling safer assets to counter cryptocurrency losses may have caused up to $1 billion in forced liquidations in precious metals as a result of declining cryptocurrency prices.

3. What Bitcoin price points are experts keeping an eye on?

Prediction markets indicate that $65,000 will be one of the major negative levels in 2026, while some analysts caution that a severe decline may see Bitcoin drop as low as $10,000.

4. For what reasons does Burry think Bitcoin is not a safe-haven investment?

Burry contends that Bitcoin has failed as a “digital gold” substitute, pointing out that it has lost value as gold and silver hit all-time highs.

5. What dangers do mining firms face as a result of declining Bitcoin prices?

Burry cautioned that numerous mining companies may have to file for bankruptcy as a result of their high operating expenses and diminishing profitability if Bitcoin falls to $50,000.

Conclusion

The warning from Michael Burry heightens worries that the decline in Bitcoin might not be a unique incident. The crypto market seems more susceptible to wider financial stress due to institutional selling, declining ETF inflows, and tighter liquidity.

Bitcoin’s decline might have repercussions not only for digital assets but also for mining companies, tokenized marketplaces, and precious metals. Investors may need to get ready for longer dips rather than a speedy recovery as confidence declines and volatility increases.

Disclaimer:
This content is for informational purposes only and does not constitute financial or investment advice.