Michael Burry warns of Bitcoin 'death spiral' risk

Michael Burry warns Bitcoin’s sharp decline could trigger a “death spiral,” forcing liquidations and causing instability across crypto and traditional markets.

Michael Burry has issued a series of warnings regarding the recent sharp decline in Bitcoin’s price, which has dropped over 40% since its 2025 peak. He argues that Bitcoin has failed as a hedge against currency debasement and is now exposed as a speculative asset. Burry cautions that further declines could trigger a “death spiral” or “collateral death spiral,” impacting companies with significant Bitcoin holdings, such as Strategy Inc., and causing forced liquidations in tokenized metals like gold and silver. He notes that institutional adoption has created shared risks, and as Bitcoin’s price falls, risk managers may be compelled to sell assets to meet financial requirements, potentially leading to broader market instability. Nearly 200 public companies holding Bitcoin are at risk, and Burry warns that contagion could spread to traditional financial markets, especially if Bitcoin falls below key psychological support levels. High leverage, thin liquidity, and record outflows from Bitcoin ETFs further raise concerns about a chain reaction across global markets.