Michael Burry, the legendary investor who predicted the 2008 mortgage crisis, has warned of a "death spiral" forming in financial markets. The alarm stems from anomalous behavior in tokenized silver, where liquidations unexpectedly surpassed those of Bitcoin.
As reported by "Hvylya", Burry outlined the scenario in an analytical note cited by industry media.
The real-life inspiration for "The Big Short" highlighted a dangerous dynamic: plunging cryptocurrency collateral values are triggering forced sell-offs of tokenized metals, driving prices down further. Burry described the process as a "vicious circle."
"Excessive leverage on these crypto exchanges due to rising metal prices meant that as crypto collateral fell, tokenized metals had to be sold. It is a death spiral of collateral," the investor stated.
According to Burry, the situation reached the point of absurdity on one popular platform, with "digital" silver exhibiting higher volatility than traditionally unstable cryptocurrencies.
"It was reported that tokenized silver futures liquidations actually exceeded Bitcoin liquidations on one crypto marketplace ironically named Hyperliquid," Burry noted.
Analysts attribute this phenomenon to the increasing use of crypto exchanges for highly leveraged macro bets on commodities like gold, copper, and silver. When CME Group raised margin requirements for traditional futures, the pressure shifted to tokenized markets. Traders unable to meet collateral requirements faced automatic position closures, triggering a chain reaction crash.
Earlier reports discussed whether the National Bank can keep the exchange rate from crossing a psychological threshold.