It may seem coincidental, but the day that michael burry He said that gold is one of the potential winning assets from the cryptocurrency collapse and hinted that he bets on the fall in stocks, the gold metal received much more attention than usual from investors.
“For a long time I thought that the time for gold would be when crypto scandals merged with contagion,” this famous investor who inspired the film posted on his Twitter account. The big short (the big gamble).
Sure, this follows gold’s good gains in November, which rose almost 8 percent after a temporary correction (down) period.
“Better” inflation data, the falling US dollar, the collapse of cryptocurrencies and a less aggressive Federal Reserve (Fed) are some of the reasons behind the strong gains in gold, which spot is currently trading around $1,776 a troy ounce.
Burry rarely comments on gold, which makes his tweet that much more relevant to traders, since what he implies is that the chaos of cryptocurrencies –caused by Sam Bankman-Fried (FTX founder and former CEO)– paves the way for the king of metals.
And it is that the financial pressures that extend through the cryptocurrency sector have affected FTX, Celsius, Voyager, Gemini (of the twins Tyler and Cameron Winklevoss) and BlockFi in recent weeks. It cannot be ruled out that other big players like Binance and especially “stablecoins” (stablecoins supposedly tied to official currencies like the dollar) may also collapse in the near future.
In this sense, the recent comments by Burry, who leads the hedge fund Scion Asset Management, come more than a year after he warned about the “mother of all falls” in cryptocurrencies. She was right.
During the 2021 bull run, the fund manager warned that all the hype and speculation lured retail investors ahead of the mother of all crashes, and it did. The above, without mentioning that in Top Money Report we believe that “cryptos” still have ground to lose.
“When crypto falls out of the trillions, or meme stocks fall out of the tens of trillions, #MainStreet’s losses will approach the size of countries. History has not changed, ”she said in an interview a year ago.
Also, in this space we agree with Burry that leverage is the biggest problem with cryptocurrencies. So those who don’t know how much leverage (debt) there is in the cryptocurrency market have more to learn about cryptocurrencies…and about the big scams that are still being built in there.
Michael Burry became famous for having detected the mortgage crisis in time and having obtained a fortune with a large bearish bet (a “big short”) against the bubble of that sector in the United States. Hence his opinion, although unusual, should not go unnoticed: go for the gold!
More falls are coming for bitcoin
In more about our pessimism in this sector, after the failed purchase of FTX by Binance, some analysts continue (we continue) “bearish” (bearish) about the future of bitcoin, and we estimate that it could fall another 25 percent to at least $13,000. It is not ruled out, however, that bitcoin could bottom out at $10,000 or below.
In this sense, according to a note published last week by JPMorgan, it seems likely that a new cascade of margin calls, deleveraging and failures in cryptocurrency companies is beginning.
Within the crypto ecosystem, the number of entities with stronger balance sheets capable of rescuing those with low capital and high leverage is decreasing, which is why we continue to alert our subscribers: It is not yet time to return to the crypto world other than for speculation (trading) in the short term and with due precautions by placing “stop loss” orders. Watch out!
Editor’s Note: This text belongs to our Opinion section and reflects only the author’s vision, not necessarily the High Level point of view.
William Beard Master in Economics from the Austrian School; liberal, gold market specialist and editor of investment newsletter Top Money Report