“The Big Bet” Economist Predicts Big Crisis Due to Cryptocurrencies

Last Thursday, Michael Burry, a well-known Wall Street investor who rose to prominence after playing the main character in Christian Bale’s film “The Big Bet,” posted a series of tweets cautioning cryptocurrency investors. Digital currencies and “memecoins” (assets based on memes, like dogecoin) could be the biggest speculative bubble in history, according to him.

Burry wrote on Twitter, “All the euphoria and speculation is driving retail investors into the biggest crisis of all.” However, it appears that he has erased or disabled his Facebook account.

His reasoning went on to warn that “when cryptocurrencies plummet into the trillions” and meme-based asset prices plummet, the investing market’s losses will surpass the value of entire countries. He concluded, “History hasn’t changed.”

Burry is currently the CEO of Scion Asset Management, an investment firm. He held a stake in video game giant GameStop (GME) when it went public in 2019, and he backed the company wholeheartedly.

In January 2021, however, his ambition was abruptly shattered when the WallStreetBets group and Reddit communities staged a fake valuation of the company’s shares, a move that later morphed into the cryptocurrency joke dogecoin (DOGE).

He was outspoken in his opposition to the market’s “abnormal” behavior. In January, he tweeted, “If you invest in GME and do well, I’m genuinely happy for you.” “However, the current situation must have legal and regulatory ramifications. This is out of the unnatural, irrational, and dangerous.”

Burry also noted, “regardless of how much you think you know about the subject.” that the major problem with cryptocurrencies is its unpredictability compared to other financial assets in his most recent Twitter messages.

Cryptocurrencies operate in fall

Bitcoin (BTC) and the other major digital assets have taken a significant fall this week. The market is in a state of flux following the Chinese government’s latest statement condemning cryptocurrency transactions and services, as well as the suspension of hundreds of mining facilities in the country.

Bitcoin fell to $31.7k this morning, less than half of its April high of around $65,000. For the first time since mid-May, the second most prominent cryptocurrency, Ethereum (ETH), fell below $2,000 per unit.

Christian Bale portrayed Burry in the film version of Michael Lewis’ bestselling 2008 financial crisis book “The Big Bet.” He began his career as a physician and graduated from Vanderbilt University’s School of Medicine. He was one of the first to adopt stock market conversations in internet forums, which led him to focus his career on professional investment.

Source: Bloomberg