On Sunday, investor Michael Burry shared an extensive self-assessment of his major market predictions over the last 26 years in a post on X. Central to his analysis is his critique of Bitcoin, which he argues lacks utility and has yet to establish itself as a reliable hedge against inflation. Burry pointed out that Bitcoin has failed to demonstrate durability as a safeguard against currency debasement, emphasizing that its performance seems driven by speculation rather than a stable economic purpose.
Burry reflected on a missed opportunity to invest in Bitcoin back in 2013, after a conversation with a friend at Lightspeed, expressing regret for not pursuing that initial interest. His post also revisited key moments in his investment history, including his decision to short Amazon.com at its peak in 2000 and his subsequent pivot to small-cap value stocks. He noted buying Apple shares in both 1998 and 2002, as well as transitioning into Korean and Chinese stocks in 2003 and 2004, respectively, ahead of notable market rallies.
Despite his track record of significant market calls, Burry’s criticism of Bitcoin is less about its price volatility and more about what he perceives to be a lack of foundational demand. He argued against the frequent comparisons of Bitcoin to gold, pointing out that unlike gold and silver, which have reached record highs during times of geopolitical uncertainty and inflation fears, Bitcoin has not served as a dependable hedge.
Burry cautioned that widespread corporate adoption of Bitcoin does not necessarily ensure its longevity. He cited the approximately 200 publicly traded companies holding Bitcoin, noting that their financial reports require these assets to be marked to market. This could compel companies to sell if Bitcoin prices continue to fall, raising further concerns around its stability as an investment.
His skepticism towards Bitcoin coincides with a growing interest in the concept of tokenization. Earlier this year, Burry highlighted the increasing adoption of tokenized assets among major financial institutions, such as JPMorgan Chase, which has begun utilizing this technology to enhance its client offerings.
Burry’s insights into tokenization indicate a broader shift within the financial sector toward integrating digital assets, which may further complicate perceptions of cryptocurrencies. As he highlighted, the relationship between Bitcoin’s fluctuations and stress in related markets could lead to significant liquidation events, particularly in tokenized metals. He warned of a potential “collateral death spiral” scenario, where a decline in Bitcoin prices could trigger forced sales in tokenized gold and silver futures, potentially leading to severe market consequences.
In conclusion, Burry’s analysis serves as a cautionary reminder for investors. The evolving dynamics in the cryptocurrency and tokenization markets underscore the need to scrutinize the long-term implications of corporate adoption and market behavior, particularly as the landscape continues to change.
