Michael Burry: AI Stock DownTurn Could Trigger Crypto Market Crash

Michael Burry Crypto Market Crash Warning Raise Fresh Fears Amid Users

Key Highlights

Michael Burry cautions that AI stocks and markets can be in a bubble just like the crashes in the past.

He bet heavily against Nvidia and Palantir, which indicated his confidence.

In his opinion, the next crypto market crash is even more perilous because of passive investment and trading under the influence of hype.

Michael Burry, the one who predicted the financial crisis of 2008, is once more raising the red flag, and he cautions investors that AI hype, passive investing, and overpriced markets may result in a big crypto crash.

Stock Market Crash Could Hit Crypto Next: Michael Burry

Michael believes the stock market is in a very risky phase. According to him, U.S. households now hold more wealth in stocks than real estate—something that has only happened twice before, in the late 1960s and during the dot-com bubble. Both times, long bear markets followed. He thinks today’s market looks similarly stretched and vulnerable.

Burry is openly negative on Bitcoin price and crypto. He has called Bitcoin a “modern tulip bubble” and believes it has little real value. More importantly, he warns that if stock markets fall sharply, crypto assets are likely to fall too, as seen during the 2022 crypto winter when the Nasdaq dropped around 30%.

Source: CryptoPatel X

Why Michael Burry’s View Matters?

Burry’s opinions matter because history supports his warnings. He successfully predicted the 2008 housing crash when most investors were bullish. He also closed his hedge fund before that crash—exactly what he has done again now. This pattern makes investors pay close attention.

Burry backed his views with action by buying put options against Nvidia and Palantir. While the media reported this as a $1+ billion bet, the actual money invested was much smaller. However, the bet pays off only if these stocks fall sharply, showing strong long-term bearish conviction.

Burry shut down his hedge fund to manage only his own money. He believes markets are no longer driven by fundamentals, making professional fund management less effective. This mirrors his move just before the 2008 crash.

Why Is He Bearish on AI Stocks?

Michael believes AI stocks are priced far ahead of reality. Tech companies are spending huge amounts on AI infrastructure, similar to spending patterns before the 2000 and 2008 crashes. At the same time, actual cloud revenue growth has slowed, raising doubts about AI’s ability to deliver profits quickly.

Source: YouTube

Why Palantir Specifically, and What About Nvidia?

He argues Palantir rebranded itself as an AI company after ChatGPT became popular. He questions whether its growth justifies its valuation. Nvidia, while extremely profitable, may also be overvalued. History shows that even great companies like Cisco and Intel crashed after hype-driven booms.

Why Passive Investing Is a Big Risk?

According to Michael, passive investing now dominates markets. When crypto markets fall, the passive funds sell all at once, which amplifies the risk of falling, and it becomes difficult to remain insured.

He recommends selling very speculative stocks that are rising quickly in time. Rather, he favors underestimated healthcare stocks, including UnitedHealth and Molina Healthcare, that are also appealing to long-term investors like Warren Buffett.

Overall Scenario and Conclusion

Disclaimer: This is not financial advice. Please DYOR before investing. CoinGabbar is not responsible for any financial losses. Crypto assets are highly volatile, and you can lose your entire investment.