Michael Burry was a former manager of a hedge fund and made another bearish prediction regarding Bitcoin and traditional equities. Renowned for his short position which preceded the U.S. housing market crash, and one of the periods in recent economic history for the world, Burry believes more pain for BTC’s price is ahead.
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Bitcoin trades at $19400, with a 8% drop in value over the last 7 days. Although the cryptocurrency had been trading sideways at its 2017 high of $20,000, the market lost 8% and could retest its annual lows close to $17,000.
Burry believes this could only be a small fraction of the future losses. Former hedge fund manager Burry was bullish on BTC. It seems that cryptocurrency trading in the region of $60,000 per month as of October 2021. Burry reached out to his Twitter audience for advice on shorting a cryptocurrency.
Ok, I haven’t done this before, how do you short a cryptocurrency. Is it necessary to borrow money? Do you have a rebate for borrowers? Is it possible to squeeze the position and call in? In such volatile situations, I tend to think it’s best not to short (…).
A short time after, BTC’s price reached its current all-time high which could have resulted in major profits for Burry, if he was able to open a short position. According to the latest information, Burry might not take profits in that situation. predictionBTC and traditional equities could be more affected by a poor earnings season.
Adjusted for inflation, 2022 first half S&P 500 down 25-26%, and Nasdaq down 34-35%, Bitcoin down 64-65%. This was multi-compression. Next came earnings compression. We are now halfway to our goal.
There are some good news for Bitcoin in the short term
Recently, two Bitcoin experts shared their potential bullish catalysers for Bitcoin. At least for a limited time. Jurrien Timmer is the Director of Macro at Fidelity Investments. He believes that equities can rebound after their recent collapse.
Timmer is however of the opinion that risk-off season may be extended while bond yields continue to trend upwards. In the upcoming earnings season for U.S. publicly traded companies, one could provide more clues on what’s next for the market, including Bitcoin which has been displaying a correlation with traditional equities.
The correlation between the asset classes is slightly positive, despite bond yields falling and equities rising over the past 12 months. It’s rare to see the Z-score for both stocks and bonds so negative at the same time. pic.twitter.com/BhJ8BklPmo
— Jurrien Timmer (@TimmerFidelity) July 1, 2022
Bloomberg Intelligence Mike McGlone expects a fall in commodities prices. The Fed could slow down in its economic tightening if these assets tend to trend downwards and offer some relief for risk-on assets, such as Bitcoin.
If commodities rally, it is often indicative of high inflation. However, when they turn to the side, this could indicate that the U.S. banking institution may be successful in cutting inflation down, their priority at the moment. McGlone said:
Commodities Aren’t Complicated, 1H Was High: When the history of 2022 is written, there’s a good chance that the 1H pump in commodity prices will play out like similar surges in the past, with a reciprocal dump.
Timmer, along with other experts, believes that the Fed might become less dovish in its monetary policies if there is negative news about the economy and talk of an economic recession. Although the market has responded to negative news from the Fed, some experts believe that this won’t be enough to end inflation.
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Jerome Powell, Fed chairman, expressed reservations about an aggressiver monetary policy. In an interview with The Wall Street Journal, Powell said bringing down inflation will result in “some pain” for global markets. This means that Burry is right, as in 2008.