Bitcoin to Zero? ‘Big Short’ Investor Flags Crypto’s Death Spiral Risk

Michael Burry, the investor immortalized for calling the U.S. housing collapse, has made a career of being early, lonely and often uncomfortably right.

His latest target is the orange-pilled bitcoin evangelists that claim the digital asset will one day be worth $1 million. Over the weekend, Burry issued a note highlighting how free-falling bitcoin and crypto asset prices could trigger a self-reinforcing “death spiral,” causing lasting negative effects on corporations that have been buying the digital assets for years.

Bitcoin, trading at around $70,000 as of reporting, has sank nearly 40% from its all-time-high of over $126,000 just a few months back in October. The nominal digital asset is now at its lowest point since November 2024. And what matters isn’t just that bitcoin falls, but how balance sheets, equity markets and forced behavior interact as it does.

Companies whose valuation narratives are explicitly tied to bitcoin, most famously Michael Saylor’s Strategy and its cadre of copycat crypto treasury businesses, all function like leveraged bitcoin ETFs, even if they’re not structured that way. When bitcoin drops 10%, the stock might drop 25% or 40%. That volatility doesn’t stay isolated; it can spill into broader risk sentiment, especially for tech and speculative growth names.

Per Burry’s note, nearly 200 publicly traded companies now hold significant BTC. If prices fall further, risk managers and boards will begin recommending sales not for strategic reasons, but to protect capital and satisfy risk policies. Those sales, broadcast through financial reporting, can create downward pressure on price.

As covered here previously, digital asset investment products had recorded year-to-date flows at a global outflow of $1 billion as of Jan. 30. Wagers on prediction markets show a growing consensus, to the tune of over 80%, that bitcoin will soon fall to $65,000; with over half of event contract holders (60%) wagering that bitcoin will end the year even lower, below $55,000, per a Bloomberg report.

For CFOs and investors watching this space, the takeaway may be a stark one: corporate bitcoin adoption doesn’t just reflect bitcoin’s price but can actively drive it lower in a downturn.

Burry did not immediately respond to PYMNTS’ request for comment.

See also: The Crypto CFO Playbook for Blockchain Treasury Management

From Digital Gold to Leveraged Beta

Bitcoin’s rise was powered by a simple narrative: a scarce, decentralized asset that could hedge against fiat debasement. In practice, critics have argued that thesis has not held. During periods of inflation anxiety, bitcoin has not consistently protected purchasing power and instead has behaved like a high-beta proxy for growth equities, rallying when liquidity is abundant and falling when rates rise.

For corporate treasuries that may have bought bitcoin as a diversifier, the effect has been the opposite of what they likely intended. Volatility has increased, not decreased, and accounting treatment has magnified the pain. Impairment rules can force companies to mark down losses while preventing mark-ups when prices recover, creating an asymmetry that may punish even patient holders.

Among Burry’s most provocative claims is not that prices can fall but that falling prices can change behavior in ways that make recovery harder, due to native feedback loops in the crypto ecosystem that can turn stress into acceleration.

After all, as prices decline, the miners who validate transactions and secure the network will see their revenue compress. Many operate with thin margins and significant debt. To stay solvent, miners must sell more of the bitcoin they earn, adding supply to a weakening market. Lower prices may then pressure the collateral backing crypto-linked loans, prompting forced liquidations that push prices down further.

Whether one agrees with the end state or not, the mechanisms surrounding bitcoin may deserve attention. CFOs are trained to look for second-order effects, and this is a textbook case of reflexivity: price moves change incentives, and incentives change prices.

Read more: How Banking-Grade Crypto Is Replacing Bitcoin’s Cowboy Finance

What This Means for Crypto Treasuries

Burry argued that if bitcoin falls another 10%, major holders like Saylor’s Strategy might find capital markets effectively closed, making it harder to raise funds. In his view, losses become self-reinforcing, as reduced access to capital forces defensive behavior from those holders.

For corporate treasuries, assets that move in tandem do not hedge one another in crises and can compound during losses. A downturn in equities coinciding with a bitcoin drawdown hits both sides of the balance sheet simultaneously, eroding resilience precisely when it is most needed.

The phrase “bitcoin to zero” may capture attention, but it also risks obscuring the more practical lesson. Assets do not need to collapse entirely to cause lasting damage. They only need to fall far enough, for long enough, to force structural change.

For finance leaders, the lesson is not that bitcoin must be abandoned wholesale. It is that crypto exposure should be modeled less like a visionary hedge and more like a volatile risk asset with unique feedback loops.