Bitcoin has been doing quite well as of late, but as we’ve seen in the past, not everyone is set to be convinced by the world’s largest and most popular digital currency by market cap. Michael Burry – a legendary investor and the subject of both the book and the film “The Big Short” – is one such person and believes that bitcoin is trapped within the confines of a massive bubble.
Michael Burry: Bitcoin Is Headed Downhill
In a tweet he was quick to get rid of, Burry claimed that bitcoin is rising too fast, and that the recent gains the currency has garnered are not sustainable. He appears to be taking a page out of the JPMorgan book, which issued similar sentiment in a recent report. He says that many current investors are likely to experience heavy losses they will not recover from.
$BTC is a speculative bubble that poses more risk than opportunity despite most of the proponents being correct in their arguments for why it is relevant at this point in history. If you do not know how much leverage is involved in the run-up, you may not know enough to own it.
As discussed in “The Big Short,” Burry made quite a bit of money off the collapse of the housing market in the year 2007, so it would be wrong to doubt his words right away. He appears to know a thing or two about bubbles and is quick to recognize the signs. He says that bitcoin’s sudden rise to fame bears many similarities to what he witnessed during the housing market boom 15 years ago.
Burry isn’t the only one who at press time is warning against bitcoin and advising caution. Gary Gensler – the present nominee for chair of the Securities and Exchange Commission (SEC) – commented after his recent Senate hearing that cryptocurrency is likely to present several challenges to the world of finance, and he is warning regulators to keep their heads up.
Gensler is concerned that the volatility of cryptocurrencies is too much to handle, thereby echoing the words of new Treasury Secretary Janet Yellen. He claims that the risks outdo the positives when it comes to bitcoin and feels that limits need to be in place.
In addition, Letitia James – the attorney general of New York – has also stated that cryptocurrencies are not to be taken lightly. Her words come after a long legal battle with both Bitfinex and Tether in the Big Apple, and both companies are being forced to pay $18.5 million in fees following a settlement.
Everyone Seems Worried
In a recent statement, James commented that the crypto space is marred with greed and fraud:
Too often, greedy industry players take unnecessary risks with investors’ money, but today, we’re leveling the playing field and issuing alerts to both investors and industry members across the nation.