 ▲ Will Michael Burry’s Warning Prove Right… A ‘Death Spiral’ After Bitcoin Breaks Below $66,000? / Gemini-generated image |
As Bitcoin (BTC) posts losses for five consecutive weeks and faces the risk of breaking below the $66,000 level, Michael Burry—the real-life investor portrayed in the film “The Big Short”—has issued a stark warning about the possibility of a “death spiral” triggered by cascading corporate sell-offs.
According to investment outlet FXLeaders on Feb. 19 (local time), the ongoing major Bitcoin correction has entered its worst phase since the 2022 bear market, marking the first five-week losing streak since then. On Wednesday, the U.S. Federal Reserve’s January Federal Open Market Committee (FOMC) minutes revealed hawkish remarks that left the door open to additional rate hikes if inflation remains persistent, pushing the U.S. Dollar Index (DXY) to a two-week high. Hit hard by the strengthening dollar, Bitcoin fell 2.5% intraday from $68,500, surrendering the $66,000 level, while crypto-related stocks such as Coinbase (COIN) and Strategy also plunged between 3% and 5%.
Renowned contrarian investor Michael Burry warned that a further 10% drop from current levels could trigger a devastating death spiral. If the financial positions of roughly 200 publicly listed companies holding Bitcoin swing into multi-billion-dollar losses, risk managers may be forced to sell assets to defend their balance sheets. This, he cautioned, could dry up funding for crypto firms and create a liquidity black hole that drives energy-strapped miners into bankruptcy.
Burry also pointed out that while gold and silver have reached record highs, Bitcoin has failed to rise alongside them, arguing that Bitcoin is not a hedge against currency debasement but merely a speculative asset. Market fear has reached extreme levels, with the Crypto Fear & Greed Index plunging to a record low of 5 last week. Historically, such readings have signaled capitulation ahead of strong rebounds, but this time even seasoned buyers are staying on the sidelines, unsettled by Burry’s assertion that avoiding trades may be the only way to win.
Traders are closely watching the $60,000 to $62,000 range as the next support zone for Bitcoin, which has slid from its late-2025 peak of $126,000. If the key resistance level of $70,000 fails to be reclaimed, the price could fall back to $60,000, with the worst-case scenario opening the door to a decline toward $58,000, where the 200-week moving average sits.
Experts predict that the downtrend will persist unless Bitcoin regains the 50-day exponential moving average (EMA) near $80,000. Holding the $60,000 support could allow for the formation of a W-shaped bottom and a potential rebound. However, if that level collapses, the market may reach a critical crossroads where the chain-reaction sell-off warned of by Michael Burry becomes reality.
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