Michael Burry is the founder of hedge fund Scion Capital, whose lucrative idea of capitalizing on falling markets during the 2008 crisis was highlighted in The Selling Game, starring Christian Bale, Ryan Gosling and Brad Pitt.
The day before, he touched on the topic of cryptocurrencies and warned blockchain investors about the possible impending danger for Bitcoin from governments. According to him, digital assets and gold may be under attack by states in the foreseeable future.
Note that it is difficult to notice any harbingers of a «blow» for the main cryptocurrency so far – at least on its chart. Bitcoin is trading in the $ 56,066 zone this morning, down 1.4 percent from a day ago. At the same time, yesterday the cryptocurrency managed to set a new price record at $ 58,640 – which is quite unusual for large coins at the weekend.
For clarity, we present a graph of the course of Bitcoin’s behavior during the last week.
Bitcoin price chart for the last week
The current figures are 69.9 percent ahead of the price of Bitcoin a month ago and 44.2 percent ahead of two weeks. With this in mind, now the cryptocurrency definitely justifies the title of an excellent asset for investment. This is especially true against the background of gold, banking instruments and other traditional things.
What threatens Bitcoin?
Burry expressed his point of view on Twitter, but after a while deleted the message. However, thanks to attentive readers, a screenshot remained as evidence. Here is a line from a famous financier quoted by Decrypt.
Get ready for inflation. The reopening and a new stimulus package will be implemented very soon. Before the COVID-19 pandemic, $ 3 of government debt produced $ 1 of GDP, but now things are much worse. During the inflationary crisis, governments will try to stifle competitors in the currency arena: Bitcoin and gold.
That is, Burry is monitoring the situation and knows that soon the US government wants to provide its citizens with another package of economic assistance. According to the financier, this will surely end with a rise in prices and a decline in economic stability. However, at the same time, it will be beneficial for the authorities to spoil the reputation of the main cryptocurrency, which is growing at an incredible pace in the current crisis.
Although how exactly it will turn out to do this is unknown. Yet Bitcoin has performed excellently over the past year amid the pandemic. For clarity: if US citizens invested $ 1200 received from the government in BTC, this amount would have already increased above $ 10 thousand. Today it is $ 10,136.
Michael Burry
As a reminder, Bitcoin is often promoted as a means of hedging – that is, reducing – the risks of dollar inflation. The cryptocurrency has a limited number of coins at the level of 21 million, while the demand for BTC is constantly growing, which makes the asset a profitable bet in the face of the constant depreciation of the dollar.
Now about the words of Burrie: we believe that they should not be taken as the ultimate truth. Yes, the now famous financier had his hour of glory in 2008 when he made a fortune in the financial crisis. More recently, however, Burry made headlines again, but now in a negative light – it turns out that he sold the shares to GameStop just before they began to skyrocket in price due to the organized efforts of WallStreetBets traders. And although it was difficult to predict this, one way or another, Michael’s action still somehow affected his reputation in the eyes of other investors.
Burry’s forecast seems especially exaggerated against the backdrop of what is happening in the cryptocurrency industry. Analytical giant MicroStrategy is only increasing its stake on Bitcoin. The company has had several successful rounds of large purchases of BTC since last summer, generating billions of dollars in revenue. Now MicroStrategy has completed the sale of its own $ 1.05 billion convertible bonds. And this money will be used to purchase Bitcoin.
These securities are formal representations of debt that can be converted into shares or bought back by the issuer – that is, the one who issued the security. MicroStrategy, for its part, retains the option to repurchase the bond from 2024. Selling like this can be a good way for a company to raise cash if it can pay interest to investors.
MicroStrategy has implemented such a maneuver before: it sold $ 400 million in convertible bonds in December and then immediately bought $ 10 million worth of bitcoins in January . At the same time, each round of large investments in BTC by the company was accompanied by strong jumps in the price of the cryptocurrency. In addition, MicroStrategy is now the largest digital asset holder and does not seem to be going to stop.
Conclusion: on the one hand, we have a constant stream of forecasts about the «probable fall of Bitcoin», on the other hand, large companies that continue to pump the crypto market with fresh money and believe in the possibility of changing the world with this type of asset. However, in general, the industry is still in the growth stage, so going against the trend is very risky. And including at the level of such statements.
