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Michael Burry Warns About Liquidation Traps in Silver Futures Tokenization
Legendary investor Michael Burry, known for successfully predicting the 2008 financial crisis, has issued a new important warning. This time, his focus is on the potential serious risks in the modern crypto derivatives market, especially in silver futures instruments that have been digitized through blockchain technology.
Background: Who is Michael Burry and Why Is His Warning Important
Michael Burry is not just an ordinary market observer. His reputation is built on sharp analysis and the ability to identify systemic financial failures before others realize them. His latest warning about tokenized silver futures indicates that concerns about extreme volatility in digital assets remain a serious concern for experienced investors.
Death Spiral: The Mechanism of a Deadly Liquidation Trap
The “death spiral” concept highlighted by Michael Burry refers to a chain liquidation mechanism that can occur in futures contracts. When digital asset prices move sharply in one direction, leveraged positions are forced to close automatically, creating increasing selling pressure. This domino process can happen rapidly, causing unexpected losses for traders.
Losses Exceed Bitcoin and Ethereum
Recent data from NS3.AI reveals that recent liquidations in tokenized futures have resulted in losses exceeding those typically seen in major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). This indicates that blockchain-based derivative instruments add an extra layer of risk that the market has not fully understood.
Rising Volatility: The Crypto Asset Ecosystem Becomes More Unstable
This development confirms an ongoing trend of increasing market volatility in digital assets. When new instruments like tokenized silver futures show higher levels of losses than fundamental assets, it signals that risk diversification within the blockchain ecosystem is still not optimal. Through his warning, Michael Burry aims to remind the community that not all digital financial innovations bring benefits; some may open new, complex risk gaps.