An investor that successfully predicted the 2008 sub-prime mortgage crisis has said that the market is heading for “the mother of all crashes” once a bubble inflated by speculation in cryptocurrency and ‘meme stocks’ bursts.
Michael Burry, the founder of Scion Asset Management who was portrayed by Christian Bale in the film ‘The Big Short’, said in a series of now-deleted tweets that hype and speculation in the market was drawing in inexperienced retail traders, meaning that when the bubble bust losses among ‘Main Street’ investors “will approach the size of countries”.
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Burry added that he believed crypto was the “greatest speculative bubble of all time in all things. By two orders of magnitude”.
The investment managers predictions may have gained credence among some investors given a recent plunge in the value of crypto markets as increased fears of regulation and the environmental impact of mining digital currencies rattled investors.
In late morning trading in London on Tuesday, Bitcoin was down 4.3% over the last 24 hours at US$31,317, while Ethereum had dropped 6.4% to US$1,863.