Michael Burry warns of a collateral spiral after silver liquidations top bitcoin

Tokenized commodity contracts have become a popular way to trade macro themes on crypto rails. They run around the clock, accept crypto as collateral, and offer leverage on assets like gold or silver without the paperwork of a traditional futures account. When markets move fast, that setup can unwind all at once.

That is what showed up in the latest metals pullback. CoinGlass data tracked roughly 129,000 liquidated traders over 24 hours, with total losses near $544 million. Silver-linked, tokenized futures led the wipeout with about $142 million in liquidations. Bitcoin followed at roughly $82 million, while ether was close to $139 million. One of the biggest single forced closes was a leveraged XYZ:SILVER-USD position worth about $18.1 million on Hyperliquid.

Michael Burry took that cross-market stress as the headline. In a recent post on his Substack, the investor known for the trade popularized by “The Big Short” called it a “collateral death spiral.” His point is that metals, crypto, and leveraged positions can be tied together through margin rules and shared collateral pools. A sharp drop in one corner forces selling in another, and the next wave often hits during thin liquidity. 

Burry also mapped out levels he thinks matter if bitcoin keeps falling. He wrote that a move below $70,000 could turn losses at large corporate holders into a funding problem, with capital markets becoming far less welcoming. He flagged $60,000 as a point that could create an existential issue for a big corporate holder with a bitcoin-heavy balance sheet. A slide toward $50,000, he warned, risks miner failures and forced sales, with tokenized metals futures facing the harshest outcomes.

The mechanics are already getting tighter in traditional markets, too. CME Group has said it will raise margin requirements on gold and silver futures, a step that tends to push leveraged traders to add collateral or cut positions.In a separate note this week, Galaxy Digital research head Alex Thorn said bitcoin could still test the $56,000 area if fresh catalysts do not emerge and buyers stay cautious. He argued that upside narratives have thinned out, while macro uncertainty and weak risk appetite keep liquidity selective.