Bitcoin’s latest slide is no longer confined to crypto markets. It is starting to surface in places investors often treat as separate, including gold and silver.
Hedge fund manager Michael Burry, writing in a recent Substack post, says the downturn in Bitcoin has triggered forced selling across tokenised precious metals, as traders and treasury managers moved to cover losses and reduce risk.
The episode highlights how crypto platforms have become closely tied to broader macro trades, allowing stress in one market to spill rapidly into another.
What began as a Bitcoin pullback has turned into a wider test of leverage, liquidity, and cross-asset exposure.
Bitcoin briefly dipped below $73,000 on Tuesday, extending a sharp pullback from recent highs.
The move coincided with weakness in gold and silver prices toward the end of January, a timing Burry linked directly to crypto-related liquidations in his note published on Substack.
Forced selling spreads beyond crypto
Burry argues that falling crypto prices forced institutional investors and corporate treasurers to liquidate other assets to meet margin requirements and manage balance sheet risk.
In his view, up to $1 billion worth of precious metals positions were sold at the end of January as crypto losses mounted.
The selling pressure was not driven by a shift in gold or silver fundamentals.
Instead, it reflected the need to free up capital quickly as leveraged positions came under strain.
Much of the activity occurred in tokenised gold and silver products traded on crypto-native platforms rather than traditional futures exchanges.
These instruments allow traders to gain exposure to metals prices without opening conventional futures accounts.
They trade around the clock and typically require less upfront capital, a structure that can encourage leverage during strong price moves but also magnify losses when markets turn.
Leverage amplifies the downturn
The most extreme volatility appeared in tokenised silver. Burry noted that liquidations in silver-linked contracts briefly exceeded those in Bitcoin on at least one crypto venue, an unusual reversal in markets where BTC typically dominates forced selling.
This move was driven less by any silver-specific shock and more by crowded positioning combined with high leverage.
As metals prices rolled over, leveraged long positions were forced to unwind.
Traders who failed to meet margin requirements saw positions closed automatically, while others exited to limit losses.
Thin liquidity amplified the impact, turning a price pullback into a cascade of liquidations.
The result was a feedback loop in which falling crypto prices weakened collateral values, forcing sales in tokenised metals, which then added further pressure across markets already under stress.
Safe haven claims under pressure
Burry has also challenged the idea that Bitcoin functions as a digital safe haven comparable to gold.
He argues that recent price action undermines claims that Bitcoin can reliably protect value during periods of market stress.
In his assessment, the market lacks an organic stabilising force that might halt a sharp decline once leverage begins to unwind.
He has warned that deeper price falls could pressure firms with large Bitcoin holdings and further destabilise markets tied to crypto collateral.
Mining companies could face financial strain if prices fall sharply enough, while liquidity in tokenised metals markets could dry up as buyers step back.
Bitcoin’s earlier rally was fuelled by the launch of spot ETFs and renewed institutional interest, but Burry has framed these drivers as temporary rather than signs of durable adoption.
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