In news of the “Duh” variety, mega-investor Michael Burry has been on record for the past year advising people to get out of the cryptocurrency market. A 77% drop in Bitcoin’s value in the past year (according to Fortune) and FTX’s $32 billion drop (according to Barron’s) seem to indicate that the financial seer may have been on the right track.
Burry is already famous for his breakout role in Michael Lewis’ the big gamble (and subsequent portrayal of Christian Bale in Adam McKay’s subsequent film) as the man who shortened a booming housing market before its 2008 crash nearly caused another Great Depression. In 2022, Burry followed up his doomsday prophecy for real estate with another prediction: the collapse of cryptocurrencies.
Yahoo Finance reported that Burry warned investors that the crypto market was experiencing the “biggest speculative bubble of all time in all things” and that the “mother of all crashes” was on the horizon for cryptocurrency investors. Crypto is designed to be an alternative to big banks, a translucent financial instrument that operates outside of the mainstream, allowing individuals, organizations, and governments to access capital funds that are not overseen by fat bankers. It turns out that there is just as much greed and corruption in unregulated markets as there are in the ones that are supposed to be supervised by the United States Securities and Exchange Commission.
Why was Barry able to predict this when investors from BlackRock to El Salvador’s President Nayib Bukele failed to? The answer is greed and stubbornness in the face of skeptics, exemplified by the acronym FUD: Fear, Uncertainty, and Doubt. The disbelievers were silenced as doomsayers, Cassandra neophytes who knew nothing about blockchain or the digital wave at the top. Unfortunately, those who claimed that cryptocurrency prices would only continue to rise are now crushed under the weight of their own arrogance.
“The very acronym FUD served to downplay the madness so many engage in,” Burry posted on Twitter on Nov. 8. “No matter how logical the argument is, if it is contrary to the bullish narrative, it deserves to be despised as FUD. Okay. Okay. Good.”
– Backup by Cassandra BC (@michaeljburryBC) November 8, 2022
According to The Street, Burry also tweeted: “The problem with #crypto, as with most things, is leverage. If you don’t know how much leverage there is in crypto, you don’t know anything about crypto, no matter how much more you think you know.”
Burry not only bailed out cryptocurrencies, but he foresaw the massive technological correction that would follow. According to a 13F disclosure (a required quarterly report from investment managers) filed by Burry’s Scion Asset Management with the SEC on Aug. 15, the hedge fund dumped about $292 million worth of shares in tech giants like Apple and Meta. and the Bristol-Myers Pharmaceutical Megaliths. squibb. Noting that President Biden hired 87,000 new IRS agents, Burry reinvested a portion of those funds in a private prison company.
Michael Burry selling everything and buying a big position in a private prison company after seeing that the IRS is hiring 87,000 new agents. pic.twitter.com/lT5ny4SdlC
– Wall Street memes (@wallstmemes) August 15, 2022
Investors who still haven’t kicked their pants off (or are at least trying to keep their underwear on) would do well to take Burry’s advice and step aside as Big Tech adjusts to dwindling demand following the pandemic and the SEC. /Federal lawmakers order how to regulate crypto markets.