Last Updated: 17 August 2022
Michael Burry is the famous investor who spectacularly shorted the housing market in 2008 and made a fortune in the process. Now the investment legend has dumped all his shares in the second quarter of 2022, suggesting that a tough time may be ahead for stocks and bitcoin.
From Apple to Meta
Scion Asset Management sold $292 million worth of shares in the second quarter of 2022. From Apple to Meta to major pharmaceutical companies, they were all affected. Currently, Burry’s fund only has a small position in a private prison company.
Michael Burry selling everything and buying a large position in a private prison company after seeing the IRS is hiring 87,000 new agents pic.twitter.com/lT5ny4SdlC
— Wall Street Memes (@wallstmemes) August 15, 2022
The big question, of course, is why this news is relevant to bitcoin. The answer to that question is fairly simple. The correlation between bitcoin and the stock markets has been at an all-time high for months. If Burry’s expectations come true, then bitcoin can expect another couple of hefty ticks in the coming period.
This would mean that the bear market is far from over and that we are in for a rough ride. Quantum Economics founder Mati Greenspan is not afraid of Burry’s expectations. Although he has an impressive CV, Greenspan says it is practically impossible to predict crashes and that there is generally always a bearish argument to be made.
“Winter is coming
Earlier this month, Burry warned investors that despite the recent rally for both bitcoin and stocks. “Winter is coming,” Burry wrote to his followers. To back this up, he pointed, among other things, to US consumer credit rising by $40 billion per month, which is a significant deviation from the historical average of $28 billion per month.
Seeking Alpha analyst Garret Duyck concurs with Burry’s concerns. Problems in consumer credit, the housing market and the health of companies is something investors should take into account. “I pay attention when Michael Burry is a bear and right now he is a huge bear,” Duyck said.
By liquidating almost all of his positions, Burry is currently “out of the market”, so it is not just talk for the investment legend. Burry’s right will have to be proven in the coming months, but it looks like it will be an exciting period either way.