[DigitalToday intern reporter Kyung-min Hong] Michael Burry, featured in the film 'The Big Short', warned of a financial collapse scenario stemming from a bitcoin plunge. He said if the price decline continues, large corporate losses, forced liquidations and bankruptcies among mining companies could occur in a chain reaction.

On Feb. 4, blockchain outlet CoinPost reported that Burry recently posted on his blog that bitcoin is in a severe bear market and laid out three destructive scenarios that could unfold if the price slide does not stop.

He said bitcoin fell for four straight months through January, entering its longest decline since 2018. He also assessed that the current situation, down about 37 percent from its all-time high, could have a significant impact on the entire financial system.

Burry first projected that if bitcoin falls below $70,000, the entire financial industry would suffer massive losses. He predicted that MicroStrategy (Strategy), led by Michael Saylor (마이클 세일러), would post more than $4 billion in valuation losses, making additional fundraising in the capital markets virtually impossible. He also assessed that other companies would take losses of 15 to 20 percent on their bitcoin holdings, prompting extremely strict risk management across the market.

The second scenario is bitcoin falling to $60,000. Burry warned that at that level, MicroStrategy, the world's largest corporate holder of bitcoin, would face a threat to its survival. He expressed concern that if forced liquidation of large holdings begins, it would bring a huge headwind to the entire market, as Saylor has previously mentioned the possibility of selling as a last resort if mNAV, the ratio of the stock price to the value of bitcoin holdings, falls below 1.

Finally, he forecast that if bitcoin plunges to $50,000, crypto mining companies would go bankrupt in a wave and dump their holdings onto the market. He said such a crypto collapse could also affect the precious metals market, leading to devastating selling pressure as buying interest in gold and silver futures contracts disappears.

He pointed out that precious metals futures contracts that are not backed by physical assets have a structure similar to crypto tokens. He stressed that an extreme market split could emerge, with futures prices crashing while only physical metals rise on safe-haven demand.

Burry, who has often criticised bitcoin as a "modern tulip bubble with no value", said recent sharp drops in gold and silver prices were also an aftereffect of bitcoin's decline. He suggested the current downturn may be the start of a "scary scenario" that goes beyond a simple correction.