Michael Burry, the visionary behind the “Big Short,” has issued a warning that the ongoing downfall of Bitcoin’s price could trigger a forced liquidation of gold and silver by up to $1 billion. With Bitcoin experiencing a 40% decline from its October 2025 highs, Burry warns that the crypto bubble is doing more than just evaporating digital wealth; it is actively cannibalizing the traditional precious metals market, too, forcing sell-offs.
According to him, not only has the narrative of Bitcoin being a “digital gold” failed, but the currency is threatening the very existence of the assets it was meant to emulate.
Why Is Bitcoin Pulling Down Gold and Silver?
Burry has attributed the current situation to “mechanical failure” of modern portfolio management. For the past few years, institutional investors and corporate treasuries have been treating Bitcoin as a core treasury asset. However, when Bitcoin fell below the critical $73,000 support level, it triggered a liquidity crisis across sophisticated portfolio margin accounts.
In such situations, traders are forced to sell their most liquid and profitable “safe haven” holdings to cover losses. Burry pointed to the end-of-January market action as evidence of this situation, suggesting that nearly $1 billion in gold and silver futures were unceremoniously dumped to keep crypto-heavy portfolios afloat. “Speculators and treasury managers rushed to de-risk by selling profitable holdings in tokenized gold and silver,” he noted.
Is This the Death of the “Digital Gold” Theory?
Several traders and investors are skeptical about the current situation, sounding the death knell of the theory of Bitcoin being a “digital gold”. This narrative gained prominence during 2024 and 2025 with the rise of spot ETFs, with Bitcoin being projected as a legitimate inflation hedging tool.
Michael Burry has dismissed this narrative by stating that Bitcoin lacks the “organic use case” necessary to stop its descent once the momentum turns. Burry warns that if Bitcoin’s price plunges to less than $50,000, the major Bitcoin mining operations can go bankrupt and leave the market for tokenized metals in a “black hole with no buyer.” He corroborates his views by stating that Bitcoin has failed to act as a safe haven during periods of geopolitical tension. The currency has often fallen in tune with the changes in the tech stocks rather than rising in tandem with precious metals like gold.
Macroeconomic Crisis and Margin Hikes
Michael Burry’s warning comes at a time when the general macroeconomic environment is witnessing a sweeping change, with the Federal Reserve maintaining a hawkish stance on interest rates. The current volatility of gold and silver has been attributed to the Chicago Mercantile Exchange (CME) and the MCX abruptly raising margin requirements for gold and silver. As a result, Gold saw its steepest single-day decline in decades, falling 9%, while silver experienced a staggering 26% collapse in a single session.
The Road Ahead
Michael Burry states that the current situation points to the market interconnectedness, where the failure of one asset influences the other. That means, if Bitcoin continues to decline, the forced selling of gold and silver may also escalate. The road ahead is speculative, and analysts are on the watchout if the digital gold will washout the value of gold and silver, which are traditionally considered as huge stores of value and a hedge against inflation.
