In Brief:
- Bitcoin dipped to $72,000 amid tech stock losses and continued rotation out of AI-driven names.
- Michael Burry warns that a continued crypto slump could have knock-on effects for gold, silver, and markets.
- Total crypto market value has fallen nearly $500 billion in under a week, highlighting extreme volatility.
Bitcoin (BTC-USD) is trying to steady itself after hitting lows around $72,000 on Tuesday, but the cryptocurrency remains extremely fragile.
Almost $500 billion has evaporated from the cryptocurrency market in less than a week. CoinGecko data shows total crypto value has fallen $467.6 billion since January 29.
Heavy selling returned, mirroring weakness in equities, particularly tech stocks, with the Nasdaq dropping more than 2% yesterday.
The AI-driven rally that carried markets through last year is showing cracks, with rotation out of AI-focused names adding to the pressure and investors overreacting to any hint of negative news, stoking market nerves.
Michael Burry, famous for calling the 2008 financial crash in The Big Short, warned in a new Substack post that Bitcoin’s bear market could spark a fresh type of financial pain if prices continue to fall.
The investor highlighted the token’s longest losing streak since 2018, noting January marked the fourth consecutive month of losses. Bitcoin is roughly 37% below its high from last year.
Burry suggested that markets are already feeling some knock-on effects. He linked last week’s drop in gold and silver prices partly to Bitcoin’s slide, citing similarities in how metals futures contracts and tokenised crypto assets function.
He added that “sickening scenarios have now come within reach,” outlining other consequences he believes could follow a continued decline.
Burry is known as a permabear, and many of his previous predictions never materialised, leading some to call him ‘the boy who cried wolf’, and we know how that story ends, but he still commands attention after correctly predicting one of the biggest stock market crashes in recent history.
Bitcoin has dipped to levels not seen since former US President Donald Trump’s re-election in November 2024, which brought expectations of a more crypto-friendly administration. Outflows from crypto-focused ETFs have added to downward pressure.
Volatility has long been part of Bitcoin’s personality. Since 2009, the cryptocurrency has endured two crashes exceeding 70% from peak to bottom, yet bounced back to reach new highs both times.
Right now, the technical picture looks grim. If support in the $70,000s fails, we could be looking at prices in the $60,000s not seen since 2024.