The hedge fund manager is among the voices warning that investors may be about to lose out big time
His warning of the 2008 crash came true and formed the basis of the hit movie The Big Short, but is a sequel coming soon?
Dr Michael Burry is warning that cryptocurrencies and so-called meme stocks are heading for the “mother of all crashes” with investors – many of whom are first-time young investors – set to lose.
The wealth management community is split on the validity of cryptos amid continued volatility and lack of regulation. However, while there are those warning against holding digital coins, others are positioning for their mainstream adoption.
Burry, hedge fund manager and founder of Scion Asset management tweeted late last week that cryptos were overpriced and that when the crash happens, losses will be “the size of countries.”
"The problem with #Crypto, as in most things, is the leverage," Burry tweeted. "If you don't know how much leverage is in crypto, you don't know anything about crypto."
The tweets have since been deleted. Earlier in the week, Burry warned about Tesla and announced that he was shorting Elon Musk’s company’s stock.
Burry is not the only influential voice warning about the risk of investing in cryptocurrencies.
Coinbase cofounder Fred Ehrsam recently said that many cryptos and other digital assets such as NFTs will fail or have little to no value in the next few years.
"There'll be millions and millions of cryptocurrencies and crypto-assets, just like there were millions and millions of websites. Most of them won't work,” he told Bloomberg.
Meanwhile, Robert Kiyosaki, author of Rich Dad, Poor Dad, tweeted: “Biggest bubble in world history getting bigger. Biggest crash in world history coming. Buying more gold and silver. Waiting for bitcoin to drop to $24K. Crashes best time to get rich.”
Biggest bubble in world history getting bigger. Biggest crash in world history coming. Buying more gold and silver. Waiting for Bitcoin to drop to $24 k. Crashes best time to get rich. Take care.
— therealkiyosaki (@theRealKiyosaki) June 19, 2021
Regulatory risk
One of the potential sink holes for cryptos has always been regulation.
Canada’s financial regulators are among the many worldwide that have warned investors of the dangers of putting their cash into unregulated and risky digital coins.
China is currently on the offensive, cracking down on digital coin mining projects in several provinces.
Over the weekend, this action has further fuelled a sell-off which has seen the price of crypto flag-bearer Bitcoin slump 8% to below $35,000. In April, the coin was priced at $63,000.
A recent poll of fund managers by the Bank of America, revealed that 81% of respondents said they felt there is a Bitcoin bubble despite easing of prices recently.
