'A Death Spiral' - Famous Financial Investor Has Grim Warning About Bitcoin

Famous financial investor Michael Burry, who may be best remembered for predicting the 2008 housing market collapse, has a grim warning about Bitcoin. Early in February 2026, Bitcoin prices fell to less than $70,000, the lowest levels the cryptocurrency has seen since Fall 2024. In a Substack post published on Monday, February 2, Burry wrote that a 10% drop in Bitcoin prices could trigger a "death spiral" for companies — like Strategy (MSTR) — with strong ties to the cryptocurrency on their balance sheets (via Bloomberg). Burry also claims that if Bitcoin takes a hit of more than 10%, it could be catastrophic for miners like MARA Holdings and Riot Platforms (via Stockwits). Unfortunately for those companies, Bitcoin continued to fall in the days after the post was published.

While Bitcoin has always been relatively volatile, 2026 has seen it drop over 20% in about five weeks. The fluctuation initially seemed inversely correlated with the movement in gold and silver prices, as the two rare metals hit record-breaking highs at the end of January 2026. However, both of those metals also dropped in price in early February, making for a bearish market trend. As investors continue to sell off risky assets, Burry warns that the weakening of Bitcoin could soon be mirrored in other markets. If the cryptocurrency's value drops below $50,000, Burry predicts that "tokenized metals futures would collapse into a black hole with no buyer."

Financial experts have a grim prediction for the U.S. dollar in 2026, and it's clearly not looking great for Bitcoin either. The cryptocurrency hit its all-time high of around $126,200 back in October 2025, meaning it plummeted nearly 50% in roughly four months. As many analysts claim Bitcoin is deeply oversold, it could potentially see a rebound if investors slow their panic-induced sell-offs. However, the likelihood of stabilization depends on whether the market remains bearish on crypto. With the sudden and aggressive liquidation caused by intense downward pressure, more than $500 million in Bitcoin positions were liquidated in a very short time.

While some financial analysts believe the Bitcoin drop is a healthy correction, Burry's grim warning may not be completely unfounded. If falling prices continue, it could force more long positions to close, resulting in millions of dollars bleeding out of Bitcoin. Overall, the crypto market has seen a major loss of nearly $50 billion in the first week of February 2026, per Trading View, mirroring patterns in the stock market and the prices of gold and silver. There are several market predictions to keep an eye on in 2026, and now Burry's Bitcoin "death spiral" is certainly one more potential outcome to track.