Burry claims that Bitcoin behaves like a speculative trade and not a hedge, which increases risks for companies holding huge reserves of BTC.
Bitcoin’s (BTC) fall below $80,000 has intensified concerns that a broader slowdown is imminent in the broader crypto sector.
Market experts believe that the recent drop in the price of BTC may not be an isolated correction, but a development that could seriously destabilize corporate balance sheets and amplify systemic risk if it continues to fall.
Major market casualty
Michael Burry has issued a stark warning that Bitcoin’s continued decline could wipe out significant market value, and the greatest risk is concentrated among companies that have built large corporate treasuries around the asset, which have multiplied over the years.
In Substack’s latest article following the latest crypto selloff, “The Big Short” investor Burry said that BTC’s fall below important technical levels opens the door for cascading stress not only in crypto markets but also adjacent financial sectors.
He said the world’s largest crypto asset was failing to meet a critical expectation often placed on it, namely to act as a hedge against currency depreciation. Instead, Burry said its recent behavior more closely resembles that of a speculative risk asset, especially given its correlation with the S&P 500. He said gold and silver have rallied due to geopolitical uncertainty and dollar weakness, but Bitcoin has not followed these macro signals.
Burry also predicted that further decline could have serious consequences for Bitcoin cash companies that were aggressively accumulating BTC in higher price ranges. He highlighted the possibility that another 10% drop could leave billions of dollars underwater for major holders such as Michael Saylor’s Strategy, and potentially cut them off from capital markets, increasing the risk of bankruptcy.
Such results, the investor said, could amplify losses beyond individual companies and contribute to broader market spillovers. Burry also noted that Bitcoin’s weakness has coincided with recent pressure on precious metals.
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Galaxy Digital’s Zac Prince also questioned the long-term viability of Bitcoin cash companies, which raise capital to hold BTC on their balance sheets while promising a return. Speaking at TheStreet panel, Prince said these models rely on risky financial engineering rather than the native value of BTC. He compared them to previous systems that created tokens to generate Bitcoin and said paying a premium for such structures does not make them sustainable.
He even explained that while some companies might pivot to revenue-generating activities, many will still struggle to justify their valuations, and added that companies should focus on actual operations first and treat BTC as a cash flow strategy and not the main driver.
Optimism diminishes
Bitcoin has been under enormous pressure and many analysts believe that there could be even more pain to come instead of a long-awaited recovery.
Former Binance CEO Changpeng “CZ” Zhao also said that while he was positive about the BTC super cycle just a few weeks ago, current market sentiment has made him less confident. Speaking on Binance’s social platform, he highlighted the rise in fear, uncertainty and doubt (FUD) in the community and admitted that the emotional intensity made him uncertain about BTC’s near-term prospects.
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