Compass Investments

Investor Michael Burry, famed for his accurate prediction of the 2008 crash, is once again expressing grave concerns about the recent bitcoin collapse, suggesting that the decline has already affected areas far beyond cryptoassets.

In a blistering post on Substack on Monday, Bjurri suggested that the bitcoin slump could force major financial institutions and corporate treasuries to begin divesting their investments in gold and silver to cover shortfalls.

Bitcoin’s collapse followed a long period of gains fueled by the launch of spot ETFs and renewed interest from institutional players. But the current recession is exposing more fundamental vulnerabilities in the crypto market, threatening to trigger a sell-off in other asset classes, according to Burry.

Bjurri believes that the weakness in gold and silver in late January may not have been caused by internal precious metals market factors, but rather by tensions in cryptocurrency portfolios.

He estimated that in the last days of the month, amid the falling price of BTC, there was a foreclosure of precious metals positions worth up to $1 billion.

He suggested that investors who made profits in gold and silver, including through tokenized futures, rushed to reduce risk and gain liquidity as losses in cryptocurrencies increased.

This argument challenges the conventional wisdom that gold and bitcoin exhibit independent dynamics during periods of market volatility. On the contrary, Bjurri believes that when cryptocurrencies take up a significant share of institutional investors’ portfolios, losses in digital assets can trigger sales of even those assets that are traditionally considered protective.

Bitcoin briefly dipped below $73,000 on Tuesday, down about 40 percent from recent peaks.

For Burry, the speed and magnitude of this movement confirms, in his view, the cryptocurrency’s lack of a solid economic base.

“There is no natural reason for bitcoin’s decline to slow down or stop, he said, warning of a possible chain effect if it declines further. If the price drops to $50,000, Bjurri said, mining companies could face insolvency as margins tighten and funding runs out.

He also expressed concern that the market for tokenized metal futures could “collapse into the abyss with no buyers” if forced closures accelerate, underscoring his worries about leverage and the interdependence of modern financial instruments.

Bjurri particularly criticized the notion that corporate and institutional ownership of bitcoin provides stable support for the price.

Companies with large BTC holdings in their treasuries, such as MicroStrategy, have often been cited as evidence that the asset is being integrated into long-term balance sheets. Bjurri rejected this claim, insisting that treasury assets are inherently flexible and can be sold quickly under pressure. “There is nothing immutable about Treasuries, he wrote, denying that corporate assets could prevent a prolonged decline.

He concluded that companies that built up BTC reserves during the upswing may be forced to sell them when prices fall enough, which would exacerbate the downtrend rather than stabilize the market.

The main message of Bjurri’s caution is that bitcoin has failed to live up to expectations as a digital safe haven or a reliable substitute for gold. Rather than serving as a hedge against turbulence, BTC’s recent behavior, he believes, has only exacerbated tensions and triggered other asset sales.