On Monday, Michael Burry, the famous investor who predicted the 2008 financial crisis, issued a new and ominous warning: Bitcoin's sharp decline could trigger a chain reaction of forced selling on several asset classes.
With Bitcoin down 40% from its October highs and altcoins losing between 20% and 40% since the last FOMC meeting in January, there is only one question haunting investors: has a new 'crypto winter' arrived?
Burry's warning: "No organic support"
In a post on Substack, the investor of the "Big Bet" estimated that up to $1 billion in precious metals had been liquidated by the end of January. The reason? Institutional investors and corporate treasuries have had to sell gold and silver to cover losses from the cryptocurrency collapse.
"There is no organic reason for Bitcoin to slow or stop its descent," Burry wrote.
The analyst warned that if the BTC were to hit $50,000, mining companies could face bankruptcy, dragging the tokenized metal futures market with it into a "black hole with no buyers." On Tuesday, Bitcoin briefly touched $73,000, an abyss from the peak of over $126,000 recorded in October.
The collapse of treasuries: Strategy and BitMine under pressure
The risk of contagion feared by Burry is confirmed by the difficulties of companies that have adopted the "Bitcoin Treasury" model. Strategy, the company led by Michael Saylor, is now facing paper losses after the price of BTC fell below its average purchase price of around $76,000. In the fourth quarter alone, the company posted unrealised losses of $17.44 billion.
Strategy's market capitalisation fell from $128 billion in July to $40 billion today, a 61% drop. Its mNAV (enterprise value vs. crypto reserves) has dropped from over 2 to 1.1, approaching the critical threshold that could force the company to sell its tokens to honour debts and dividends.
Even worse is the situation of BitMine Immersion Technologies, chaired by Tom Lee. The company holds 4.3 million ETH purchased at an average of $3,826. With the current price around $2,300, the unrealised losses exceed $6 billion. Analysts warn: these companies are 'trapped in their own narrative'. Any sale, even a small one, would send a devastating signal to the market.
Technical Analysis: a long-term bearish trend
Japanese analyst Hiroyuki Kato of CXR Engineering has confirmed that the market may have entered a structural downtrend. Bitcoin broke support from the November low, prompting traders to switch from buy-the-dip to short-selling strategies.
Ethereum breached the critical $2,600 level (about 400,000 yen), accelerating the decline. Kato notes that the weekly chart shows a 'head and shoulders' pattern approaching the neckline: a definitive break-up would make a short-term recovery almost impossible. "The high volatility of cryptos is the canary in the coal mine for the entire stock market," argues Kato.
It's not a winter, it's a “new paradigm”
Despite the negative signals, a report by Tiger Research suggests that this phase is different from previous crypto winters (such as the FTX bankruptcy or the Earth-Moon crack). This time the crisis does not stem from internal industry failures, but from external macroeconomic factors: interest rates, customs policies and the dynamics of the ETF.
According to Tiger Research, the market has split into three tiers:
- Regulated zone: low volatility, dominated by institutions.
- Unregulated zone: for high-risk speculation.
- Shared ETFs: such as stablecoins.
The trickle-down effect, which led all altcoins to rise when Bitcoin grew, seems to have vanished. ETF capital remains stuck on Bitcoin. "A crypto season where everything goes up together is unlikely to be repeated," the report concludes. The next bullish market will come, but it will not be for everyone.
