Michael Burry, the investor renowned for foreseeing the 2008 financial meltdown, issued a stark warning on Monday about Bitcoin’s recent steep decline potentially sparking a wave of forced liquidations across various asset categories.
Bitcoin has plunged roughly 40% from its October peak, while alternative cryptocurrencies have tumbled between 20% and 40% since the Federal Open Market Committee meeting in January. This downturn has ignited widespread speculation about whether the crypto market is entering a prolonged winter.
Michael Burry Predicts $BTC Could Drop to $50K
In his Substack commentary, Burry highlighted that institutional investors and corporate treasuries may have offloaded nearly $1 billion worth of precious metals at January’s end to offset losses incurred in crypto holdings.
“There's no fundamental reason for Bitcoin's decline to halt or slow down,” he stated. He cautioned that if Bitcoin falls to around $50,000, mining companies might face insolvency risks and markets tied to tokenized metal futures could collapse entirely due to lack of buyers.
Bitcoin briefly touched $73,000 recently—down approximately 40% from its October high exceeding $126,000. According to Burry, despite being touted as a digital safe haven akin to gold, Bitcoin has failed this promise. He dismissed recent gains driven by ETFs as speculative rather than indicative of sustainable adoption.
The Unraveling Crypto Treasury Model: Strategy and BitMine
Burry’s concerns are echoed by tangible struggles within crypto treasury firms. Strategy—the Bitcoin accumulation company led by Michael Saylor—is currently facing significant unrealized losses after BTC prices dipped below their average purchase price near $76,000. The firm reported an unrealized loss totaling approximately $17.44 billion in Q4 alone.
The market cap of Strategy plummeted from around $128 billion in July down to roughly $40 billion—a staggering 61% drop relative to October highs for Bitcoin itself. Their mNAV ratio (enterprise value divided by crypto holdings) declined sharply from over two last year toward a critical level near one that could force asset sales.
This shift marks a departure from Saylor’s previous commitment never to sell any holdings; now Strategy is considering divestments should mNAV fall below one threshold. To bolster liquidity amid these challenges they raised about $1.44 billion through stock issuance aimed at covering future dividends and debt obligations.
BitMine Immersion Technologies—supported by Peter Thiel with Tom Lee chairing Fundstrat—faces even deeper setbacks holding roughly 4.3 million ETH acquired at an average cost above $3,800 but currently valued near just over half that amount (~$2,300), resulting in more than six billion dollars’ worth of paper losses.
Cautionary voices highlight how these treasury entities are trapped within their own narratives: any sale—even minor—could trigger panic selling causing disproportionate damage both on share prices and underlying tokens beyond what such sales would alleviate financially.
Technical Indicators Signal Prolonged Downtrend Ahead
CXR Engineering analyst Hiroyuki Kato warns the cryptocurrency sector may be entrenched in an extended bearish phase after BTC breached November lows — shifting investor sentiment away from buying dips toward aggressive short-selling tactics instead.
The breakdown beneath Ethereum’s crucial support level near ¥400K ($2600) accelerated declines across altcoins which have dropped between twenty percent up through forty percent since early January post-FOMC announcements. Weekly charts reveal head-and-shoulders formations nearing neckline breaks which typically signal difficulty recovering soon thereafter.