Michael Burry Breaks Down How Bitcoin’s 40% Slide Could Put Corporate Holders in a Bind

As if Bitcoin wasn’t already having a rough go, the biggest short-seller of all time just chimed in.

In a Substack post on Monday, Michael Burry warned that Bitcoin’s slide could turn into a self-feeding “death spiral,” especially for companies that spent the last year stuffing their balance sheets with it.

Bitcoin is now down about 40% from its October high. And for Burry, that’s kind of the point. When things got tense, gold and silver moved higher. Bitcoin didn’t.

Instead, the price has stayed tied to confidence, fresh money coming in, and how much pain holders are willing to stomach on their balance sheets.

If Bitcoin keeps falling, Burry says the damage won’t stay on a chart. Companies holding it would have to mark those losses, and suddenly what looked like a bold treasury move starts turning into a real financial headache.

One obvious pressure point is Strategy, the biggest corporate holder of Bitcoin. Burry wrote that another 10% drop could push the company billions further underwater and make raising capital a lot harder. A deeper slide could put miners in real trouble, setting off another wave of forced selling.

Bitcoin briefly dipped below $73,000 this week, its lowest level since Donald Trump returned to the White House. Analysts point to ETF money drying up, thinner liquidity, and fading interest. Even a lot of crypto-native traders are starting to wander toward prediction markets and short-term event trades instead.

Burry also called out Bitcoin’s growing tendency to move alongside stocks. Its correlation with the S&P 500 has crept toward 0.50, which weakens the idea that it holds up when equities sell off. When losses stack up, selling can speed up instead of calming down.

Spot Bitcoin ETFs haven’t helped much either, at least in Burry’s view. They made access easier, but they also poured fuel on speculation. Several of the biggest ETFs just logged their largest outflows since November, with heavy redemptions late in January.

To be clear, he’s not saying the whole financial system is about to crack. Bitcoin’s roughly $1.5 trillion market value and limited corporate exposure keep the damage contained. We’ve already seen crypto blowups like Terra and FTX come and go without taking traditional markets down with them.

That said, ripple effects are starting to show. As crypto prices fall, investors looking to cut risk may sell winners elsewhere. Burry pointed to recent pressure in gold and silver, arguing that forced selling tied to tokenized metals played a role.

Those products aren’t backed the same way physical metals are. When things get stressed, they can overwhelm real markets, creating what Burry called a “collateral death spiral.”

If Bitcoin slides toward $50,000, he warned, miners could start going bust and tokenized metals markets could run out of buyers entirely.

Bitcoin’s supporters aren’t buying the doom talk. Michael Saylor has said Strategy isn’t facing margin calls and has a $2.25 billion cash cushion. Still, the room for error is getting smaller.

Burry’s main point is that treasury assets don’t get a free pass. They’re marked to market. And once prices start making decisions for you, selling stops being optional.

At the time of publishing this article, Stocks.News holds positions in Bitcoin and Ethereum as mentioned in the article.