Michael Burry, the investor who excellently shorted the 2008 housing bubble, has vacated nearly all the stocks in his portfolio during Q2, saying that there may be a massacre ahead for stock and crypto markets.
According to a 13F disclosure filed with the Securities and Exchange Commission (SEC) on Aug. 15, Burry’s hedge fund Scion Asset Management lean-to around $292 million worth of shares across companies from Apple and Meta to pharmaceuticals giant Bristol-Myers Squibb, leaving only a minor position in a private prison company.
As Bitcoin (BTC) and crypto have a strong correlation to the stock market, especially in relation to macroeconomic events such as Federal Reserve interest rate hikes and the Russian/Ukraine conflict, Burry’s bearish outlook on stocks may also be a warning sign for the crypto sector.
Mati Greenspan said, “Predicting a stock crash is a lot like predicting an earthquake. You know one will happen every so often but you can never tell exactly when or how severe it will be.”
When asked by Cointelegraph whether Burry’s actions could spell potential despair for the crypto markets, Quantum Economics founder and CEO Mati Greenspan said he is relatively unfazed by Burry’s moves, despite his track record of predicting bearish scenarios.
He also worried that investors shouldn’t jump at every piece of FUD that circulates online, observing that “investing is a long-term play and doesn’t normally work out for people who jump at shadows.”
Earlier this month, Burry advised investors that despite the recent rally in crypto and stocks, “winter is coming.” He pointed to U.S. consumer credit rates rising by $40 billion per month in contrast to its historical average of $28 billion month over month as reasons for such.
Seeking Alpha analyst Garret Duyck, though, offered a different take to Greenspan, outlining in an Aug. 16 article that Burry’s concerns over macro factors such as consumer credit, housing, and business conditions may be something investors should take note of.
While Burry’s predictions have had varying degrees of correctness since he rose to fame by shorting the 2008 housing bubble, some of his most recent takes on crypto have generally come into fruition.
For example, in March 2021 Burry described Bitcoin (BTC) as a “speculative bubble that poses more risk than opportunity” as he forecast a crash would soon unfold. This coincided with the price of BTC going from $59,000 in March to around $34,000 by the End of May.
In June he followed that up by cataloging the price action in stock and crypto markets as the “Greatest Speculative Bubble of All Time in All Things.” And while BTC went on a flow to a new ATH in November of around $69,044, no one needs repeating of how much the market has crashed since then.
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