Michael Burry from ‘The big short’ calls cryptocurrencies a “bubble” but says he doesn’t bet against the market
The famous hedge fund manager Michael Burry expressed an opinion that was at best contradictory on Monday (15). When talking about the cryptocurrency market, Burry called it “the biggest bubble I’ve ever seen.” However, the manager claims that he does not short, that is, he does not bet against the market.
“I’ve never shorted any cryptocurrency. This is my third bubble, and the biggest. I’ve learned a thing or two. 30 year Treasuries on the other hand…” said Burry.
Burry rose to fame in 2008 after predicting the unfolding financial crisis. He even put the capital of his manager, Scion Asset Management, at risk because of his analyses. However, Burry proved right and managed to make money after the crisis broke out.
His character was one of the protagonists of the movie ‘The big short’, in which he was played by actor Christian Bale.
But why does Burry classify cryptocurrencies as a bubble and not bet against the market? After all, if he’s right, the manager can repeat the big bet (no pun intended) he made in 2008 and make a lot of money. The problem, in Burry’s view, is that he doesn’t understand how to value this market himself.
- China arrests senior Communist Party official for supporting bitcoin mining
- Michael Saylor recommends Elon Musk to sell part of his Tesla shares and invest in Bitcoin
- AMC already has 14% of online purchases made with cryptocurrencies
“How do you short a cryptocurrency? Do you have to secure a borrow? Is there a short rebate? Can the position be squeezed and called in? In such volatile situations, I tend to think it’s best not to short, but I’m thinking out loud here,” wrote Burry.
In other words, even though Burry believes he has fundamentals to bet against the market, he understands that the strong volatility can make this bet take a long time to be paid. In this sense, it seems that the manager is seeking to avoid the problems his fund faced before the outbreak of the 2008 crisis.
At the time, Scion nearly lost the capital of all of its customers, who considered Burry’s bets “crazy.” The funds faced a series of slumps that caused customers to place orders for withdrawals almost daily.
This was the second time Burry had warned of a large bubble. The first alert came in October, when he alerted not just to cryptocurrencies, but to the entire market. In Burry’s view, the next financial meltdown will be the “mother of all crises.”