Casual investors buying meme stocks and cryptocurrencies are signing up for devastating losses, Michael Burry warned on Thursday.” All hype/speculation is doing is drawing in retail before the mother of all crashes,” the investor tweeted. “When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries.”
Burry added that people’s fear of missing out has propelled asset prices to unsustainable levels. “#FOMO Parabolas don’t resolve sideways,” he cautioned.
The Scion Asset Management boss also sounded the alarm on crypto fans borrowing recklessly to buy their favorite coins.
“The problem with #Crypto, as in most things, is the leverage,” he tweeted. “If you don’t know how much leverage is in crypto, you don’t know anything about crypto.”Burry returned to Twitter this week after deleting his profile in April. He’s previously used the social-media platform to issue warnings about Tesla – which he’s short – as well as GameStop, bitcoin, dogecoin, Robinhood, inflation, and the wider stock market.
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The Scion chief has attracted a cult following since he anticipated the housing-market crash that precipitated the global financial crisis. His billion-dollar bet against the bubble was chronicled in the book and the movie “The Big Short.”Burry also helped pave the way for the GameStop short squeeze in January, which kicked off the meme-stock boom. He bought a stake in the video-game retailer in 2019 and wrote several letters to its board, emboldening retail investors to bet on the stock.