Michael Burry, the investor who famously shorted the 2008 housing bubble, dumped nearly all of the stocks in his portfolio during the second quarter, suggesting a bloodbath ahead for the stock and crypto markets.
According to a 13F disclosure filed Aug. 15 with the Securities and Exchange Commission (SEC), Burry’s hedge fund Scion Asset Management has lost about $292 million in shares of companies from Apple and Meta to pharmaceutical giant Bristol-Myers Squibb, leaving only a small job in a private prison company.
Michael Burry Sells Everything and Buys a Major Position in a Private Prison Company After Watching the IRS Hire 87,000 New Agents pic.twitter.com/lT5ny4SdlC
— Wall Street Memes (@wallstmemes) August 15, 2022
Since Bitcoin (BTC) and crypto have a strong correlation with the stock market, especially with regard to macroeconomic events such as the Federal Reserve rate hikes and the conflict between Russia and Ukraine, Burry’s bearish outlook for stocks could also be a warning sign for the future. cryptocurrencies. sector.
However, when asked by Cointelegraph whether Burry’s actions could spell potential gloom for 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.
Greenspan stated that it is nearly impossible to predict the time and extent of crashes, and suggested that in general there is always something bearish on the horizon that could cause stock and crypto prices to crash.
“Predicting a stock crash is a lot like predicting an earthquake. You know that every now and then one will happen, but you can never say exactly when or how severe it will be.”
He also stressed that investors should not jump on every bit of FUD circulating online, noting that “investing is a long-term game and doesn’t normally work for people who jump on shadows.”
Earlier this month, Burry warned investors that despite the recent rally in crypto and stocks, “winter is coming”. He pointed to an increase in US consumer credit rates of $40 billion per month as the reasons for this, as opposed to the historical average of $28 billion per month.
Seeking Alpha analyst Garret Duyck, however, offered a different take on the matter, outlining Burry’s concerns about macro factors such as consumer credit, housing and business conditions in an Aug. 16 article for investors to consider.
“I pay attention when Michael Burry is a bear and right now he is a huge bear. By liquidating all but one of the positions in his portfolio, he is putting his money where his mouth has been: out of the market.”
“The macro data seems to support his hypothesis. I see weakness everywhere. Consumers are struggling, while housing and business conditions predict job weakness. Earnings estimates are too generous and negative gains will materially affect stock valuations that have already been stretched.” he added.
While Burry’s predictions have had varying degrees of accuracy since he became famous for shorting the 2008 housing bubble, some of his most recent views on crypto have generally come true.
For example, in March 2021, Burry described Bitcoin (BTC) as a “speculative bubble that carries more risk than opportunity” as he predicted a crash would happen soon. This coincided with the price of BTC moving from $59,000 in March to around $34,000 at the end of May.
Related: Michael Burry of The Big Short Targets Cathie Wood’s Ark Innovation ETF
In June he followed that up by labeling the price action in stock and crypto markets as the “greatest speculative bubble of all time in all things.” And while BTC spiked to a new ATH of about $69,044 in November, no one needs to recall how much the market has crashed since then.