Michael Burry Warns of Major Risks if Bitcoin Continues to Fall in 2026

Michael Burry, the legendary investor who shot to fame in the film The Big Short, is back in the spotlight after warning of the significant risks Bitcoin could face if its downward trend continues into 2026.

In his view,Bitcoin is not digital goldas has been widely rumored, but rather a purely speculative asset that is vulnerable to triggering long-term damage if selling pressure continues.

Key Points

• Michael Burry believes Bitcoin has failed to function as a hedge like gold.
• A price drop of up to 40% has the potential to trigger a domino effect among BTC holding companies.
• Extremely bearish market sentiment could extend the correction phase until 2026.

Michael Burry's Major Warning on Bitcoin

In his latest post on Substack, Burry highlighted Bitcoin's sharp decline, which he believes is not just a healthy correction.

He emphasized that many companies and institutions have been hoarding Bitcoin as part of their balance sheet strategy. When the priceBTC drops significantly, the pressure on the financial balance sheets of these companies is becoming greater.

Burry warned of the potential for forced selling. This means companies or institutional investors could be forced to sell their Bitcoin to cover losses, meet debt obligations, or maintain liquidity.

If this happens on a large scale, it will impact not only the price of Bitcoin, but also overall market confidence.

He even described the scenario as dire, as it could cause long-term damage to institutional crypto adoption. According to Burry, once institutional trust is destroyed, it takes a very long time to recover.

Read Also:Bitcoin vs Gold: Which is Better for Investment?

Bitcoin as Speculation, Not a Hedge

One of Michael Burry's most pointed criticisms is the claim that Bitcoin is a hedge against inflation. He believes this narrative fails to prove true, especially when the market is under significant pressure.

Instead of moving like gold, which tends to be stable during times of crisis, Bitcoin often experiences sharp declines along with other risk assets.

Burry described Bitcoin as more of a speculative instrument, heavily dependent on liquidity and sentiment. When global liquidity tightens and investors become risk-averse, Bitcoin is usually one of the first assets to be dumped.

Read Also:Bitcoin vs. Gold Investment in 2025: Which Will Be More Profitable?

Current Bitcoin Market Conditions

Burry's warning comes amidst volatile crypto market conditions. Bitcoin briefly fell below $78,000 after experiencing a daily decline of around 6%. This decline triggered the liquidation of derivative positions worth $2.56 billion, indicating high levels of leverage in the market.

Furthermore, the crypto Fear and Greed Index is at 15, indicating extreme fear sentiment. This figure reflects high levels of panic and uncertainty among investors. However, some analysts still see the potential for a technical rebound if selling pressure subsides and there are no further negative triggers.

However, Burry remains skeptical. He believes that without significant fundamental changes, any price increase risks being just a dead cat bounce.

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Consistent Views Since Long Ago

This isn't the first time Michael Burry has criticized Bitcoin. Previously, he called BTC's price at $100,000 ridiculous. He even compared the Bitcoin euphoria to the tulip mania in the Netherlands in the 17th century.

Burry is also known as a strong critic of asset bubbles, including in the technology and financial sectors.artificial intelligence (AI)Since late 2025, he has warned that the combination of AI and crypto bubbles could trigger global market instability if they burst simultaneously.

What Does This Mean for Retail Investors?

For retail investors, this warning doesn't necessarily mean Bitcoin will collapse completely. However, it serves as an important reminder that the risks in the crypto market are very real.

Extreme volatility, excessive use of leverage, and reliance on sentiment require investors to be more disciplined in risk management.

Diversification, using capital that is prepared to lose, and selecting a safe and regulated trading platform are becoming increasingly crucial amidst uncertain market conditions.

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Conclusion

Michael Burry's warning about Bitcoin in 2026 highlights a risk often overlooked during a bull market. He views Bitcoin as more of a speculative asset than a hedge, with potential systemic impacts if the price decline continues.

While the potential for a rebound remains, investors need to be realistic, disciplined, and not neglect risk management amidst crypto market volatility.

FAQ

SWho is Michael Burry?

Michael Burry is a famous investor who predicted the 2008 financial crisis and his story was made into the film The Big Short.

Why is Michael Burry pessimistic about Bitcoin?

He believes Bitcoin has failed to become a hedge asset and is more like a speculation that relies on liquidity.

What are the biggest risks if Bitcoin continues to fall?

The main risk is forced selling by institutions which could trigger a domino effect and undermine market confidence.

Can Bitcoin still rebound?

There is still a chance for a short-term rebound, especially if selling pressure eases, but the risks remain high.

Why is it important to choose a platform like Bittime?

Regulated platforms like Bittime help investors transact more safely and transparently amid market volatility.