Big Short Investor Michael Burry Sees This Asset Rising Amid FTX Contagion

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Michael Bur­ry, the fund man­ag­er and investor who became pop­u­lar from the “The Big Short” movie, believes gold will shine as investors seek safe­ty from cryp­to risks due to the cat­a­stroph­ic col­lapse of Sam Bankman-Fried’s FTX. 

Bur­ry is noto­ri­ous­ly famous for short­ing the U.S. hous­ing mar­ket and prof­it­ing from the 2008 finan­cial cri­sis. He also net­ted mil­lions from invest­ing in GameStop in 2019 before the Red­dit fren­zy and meme stock sea­son in Jan­u­ary 2021. 

Big Short Investor: Time for Gold 

The fund man­ag­er shared his thoughts on gold in a tweet that has now been delet­ed. Accord­ing to Bur­ry, Gold’s time will come as the cryp­to mar­ket con­tin­ues to suf­fer from the con­ta­gion caused by FTX’s down­fall. 

“Long thought that the time for gold would be when cryp­to scan­dals merge into con­ta­gion,” the fund man­ag­er said.

Recall that cryp­to exchange FTX came crash­ing down last week after alleged­ly mis­man­ag­ing users’ funds for years. The com­pa­ny soon ran into liq­uid­i­ty issues and was unable to process with­drawals. FTX and more than 130 affil­i­at­ed com­pa­nies have filed for vol­un­tary Chap­ter 11 and 15 bank­rupt­cy pro­tec­tion, with esti­mat­ed lia­bil­i­ties between $11 bil­lion and $16 bil­lion. 

FTX’s down­fall sent anoth­er wave of liq­uid­i­ty crunch across the cryp­to indus­try as numer­ous enti­ties, includ­ing Gen­e­sis, Block­Fi, Galaxy Dig­i­tal, and Canada’s Ontario Teach­ers Pen­sion Plan (OTPP), had finan­cial expo­sure to the exchange before it went bankrupt.

Mean­while, gold ral­lied 8% this month after con­sec­u­tive loss­es in the last sev­en months. Accord­ing to ana­lysts, investors are bull­ish on the pre­cious met­al due to cool­ing infla­tion and cryp­to risks, among oth­er rea­sons. 

The Mother of All Crashes in Crypto

Burry’s lat­est com­ments come more than a year after he warned about the “moth­er of all crash­es” in cryp­to. Dur­ing the bull run last year, the fund man­ag­er cau­tioned that all hype and spec­u­la­tion do is draw in retail investors before the moth­er of all crash­es. 

“When cryp­to falls from tril­lions, or meme stocks fall from tens of bil­lions, #Main­Street loss­es will approach the size of coun­tries. His­to­ry ain’t changed,” he said. 

The investor fur­ther not­ed that lever­age is crypto’s biggest prob­lem, and those who do not know how much lever­age there is in the cryp­to mar­ket have more to learn about crypto.

Fea­tured Image Cour­tesy of US News Money

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