Dr. Michael Burry, the man behind The Big Short and, more recently, the Cassandra Unchained Substack newsletter, sees an AI bubble, and he’s betting against it with bearish put options against two of the highest flyers out there: Palantir (NASDAQ:PLTR | PLTR Price Prediction) and Nvidia (NASDAQ:NVDA). Even if there weren’t an AI bubble, I’m sure there are a multitude of scenarios that could play out and result in pretty painful plunges for shares of the two companies.
If Palantir and Nvidia shares can post multi-bagger gains in just a few years, you can bet that some of it can be given back just as fast. Either way, there needs to be a timely catalyst to kick in such that bearish put options pay off. And while Dr. Burry might have the patience and liquidity to wait for one to kick in, most retail traders might not.
Either way, Burry’s bearish views of AI and big tech are quite wellknown now. And with Cassandra Unchained, you can bet that he’ll be chiming in every now and then with bearish commentary. Dr. Burry isn’t just a bear on the tech and AI trade, though; he’s also been quite vocal on his stance on cryptocurrencies, going as far as to say that Bitcoin (CRYPTO:BTC) is “worth nothing” and that it’s “the tulip bulb of our time.”
Michael Burry might be the biggest Bitcoin bear since Charlie Munger
Undoubtedly, Burry’s bearish comments on Bitcoin seem to remind me of what the late great Charlie Munger, best known as the right-hand man of the legendary Warren Buffett, said about the digital asset. I guess you could say that Burry is the biggest Bitcoin bear since Munger.
Of course, Munger seems to have used more humorous and entertaining language when asked about Bitcoin, going as far as to refer to it as “disgusting,” “like trading turds,” or “rat poison.” Either way, it seems like both men think Bitcoin could go to zero.
It’s getting harder to be a bear on Bitcoin, even amid recent volatility. The asset has collapsed before, only to come roaring back with even more momentum. And while Bitcoin has been around (and doing well for the most part) for many years now, the digital asset is still not nearly as time-tested as gold. Arguably, the way Bitcoin has reacted in the face of market volatility might be a reason to steer clear of the asset as a portfolio diversifier.
Given that Bitcoin has been fragile in times of market panic, and that it’s impossible to value Bitcoin (a limited supply of it isn’t enough to make a prediction about where prices could head over the long run), I’d argue that investors should view the asset as a speculative, high-upside bet, much like a high-multiple tech stock.
So, should investors ditch crypto in response to Burry’s comments about Bitcoin?
If you can’t handle the volatility and another leg lower, it’s probably time to reduce one’s exposure. That said, if you’re perfectly fine with stomaching the steep drops and you’ve ridden the roller-coaster on the way down before (think 2022 or 2018), feel free to do as you please. The asset could bounce back sharply, just as it could continue moving lower.
Given catastrophic crashes in Bitcoin tend to have been spaced out four years apart, I’d say we’re overdue for a big dip going into the new year. As the technical picture begins to break down, if it hasn’t already, perhaps there’s too much risk in buying the dip right here.
It seems like physical gold, as opposed to digital gold, might be where the momentum is at. While Burry’s comments are not to be taken as gospel, I do find that it might be a wise time to take profits in the crypto trade, especially if you’re short on liquidity and have nothing to take advantage of any dips that come the equity market’s way.
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