Cryptocurrency market 580,000 liquidations in 24 hours! "Big Bear": Bitcoin may repeat the 2022 crash pattern

As Bitcoin leads the cryptocurrency market into a continuous decline, well-known short-seller and the so-called “Big Short” Michael Burry recently issued a stern warning, stating that Bitcoin may repeat the crash pattern of 2021-2022. This suggests that Bitcoin’s price could further drop to $50,000 or even lower.

Burry rose to fame for accurately shorting mortgage-backed securities before the 2008 financial crisis, and his trades are documented in Michael Lewis’s book “The Big Short” and the Oscar-winning film of the same name.

On the 5th, Burry posted a Bitcoin price trend comparison chart on X, with only the caption “Bitcoin trend pattern.” The red arrows marked on the chart show that Bitcoin’s current decline from $126,000 to $70,000 is highly similar to the previous plunge from $35,000 to below $20,000.

Analysis suggests that although Burry did not specify an exact target price, the signals conveyed by the chart are very clear: if this trend repeats, Bitcoin could fall below $50,000.

However, it should be noted that the sharp decline of Bitcoin in 2021-2022 occurred under very different market conditions: the Federal Reserve was in an aggressive rate-hiking cycle, retail investors engaged in high-leverage speculation, and platforms like Terra and FTX experienced successive collapses. Currently, the market is supported by institutional ETFs, liquidity depth has significantly increased, and regulatory frameworks are more mature.

This is not the first time Burry has issued a warning about Bitcoin’s trend recently. Just two days ago, on February 3rd, he published a detailed analysis on Substack explaining why he believes Bitcoin is entering a dangerous zone. Burry warned that if Bitcoin drops another 10% from its levels earlier this week, an “alarming scenario” could soon unfold.

Burry pointed out that Bitcoin has exposed its nature as a purely speculative asset and has not successfully established a safe haven status against currency devaluation like precious metals.

He warned that if Bitcoin further declines, it could quickly strain the balance sheets of major holders, trigger larger forced sell-offs, and cause broader value destruction.

Burry specifically mentioned Strategy, the world’s largest Bitcoin treasury company, writing: “If Bitcoin drops another 10%, the company will face billions of dollars in paper losses and may find it nearly impossible to refinance in the capital markets.”

He also warned that if Bitcoin’s price falls further to $50,000, it will not only deal a heavy blow to miners but also trigger a chain reaction affecting other markets.

Bitcoin’s price has recently accelerated downward, with a sharp plunge early Friday morning, briefly falling below $60,000. As of press time, it has rebounded to around $64,000. Compared to the record high of $126,000 in early October last year, Bitcoin’s price has been halved.

CoinGlass data shows that in the past 24 hours, 579,506 traders were liquidated in the crypto market, with a total liquidation amount of $2.603 billion. Among them, longs accounted for $1.974 billion, and shorts for $429 million.

Deutsche Bank analyst Marion Laboure pointed out that this Bitcoin decline is driven by multiple factors, including hawkish signals from the Federal Reserve, outflows of institutional funds, thinning liquidity, and stagnation in regulatory progress.

(Source: Caixin)