Will History Repeat? Michael Burry Predicts 2008-Like Crash In the Crypto Markets

Will History Repeat? Michael Burry Predicts 2008-Like Crash In the Crypto Markets

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The post Will History Repeat? Michael Burry Predicts 2008-Like Crash In the Crypto Markets appeared first on Coinpedia – Fintech & Cryptocurreny News Media| Crypto Guide

Back in 2008, when US investment bank Lehman Brothers Holdings Inc. filed for bankruptcy, it reduced people’s faith in the banking system to such an extent that a new class of assets, having no support from any formal bank, came into being. 

The asset was Bitcoin, which is now the most popular cryptocurrency. Bitcoin was first found in November 2008, about two months after the Lehman crisis.

While it had a beautiful run in the few years post inception, the cryptocurrency market is facing brutal times of late. Bitcoin is highly bearish and seems unable to mark a decent recovery, and has fallen by another 5% over the last 24 hours, to currently trading at $18,793. 

Upon examining the current market conditions, expert investor Michael Burry has predicted a 2008-level economic crisis. He was also one of the few people who speculated about the 2008 housing and subprime mortgage crisis- which makes his prediction this time around one to pay heed to. 

Why Is Burry Predicting An Economic Crisis?

Burry’s current prediction of the economic crisis is based on multiple factors. His prediction has come out following the crash in the crypto market

Over the past week, Bitcoin has fallen by more than 8%. Despite a good response to the Ethereum merge, ETH prices still seem suppressed by bearish pressure and the asset has fallen by 9% over the last 24 hours. 

Other altcoins like Dogecoin, Solana, Polkadot, MATIC, and Ethereum Classic have also fallen by 8% to 10%.

The dramatic crypto crash is not the only factor fueling Burry’s prediction. He has also highlighted the crash in the SPACs market. The Special Purpose Acquisition Company market peaked in 2021 but after that, it has been struggling enormously. He also highlighted the crash in the meme stocks.

The current inflation crisis is one of the major factors provoking the forecast. The Consumer Price Index has revealed that inflation is at record high levels despite the Federal Reserve’s efforts and involvement in quantitative tightening and interest rate hikes in order to curb it. 

In the recent Jackson Hole speech, Fed chair Jerome Powell asked households and businesses to “get ready for pain” as the Fed battles inflation.

What’s Next For The Economy?

Clearly, the US economy is going through a tough phase. In addition to dealing with record inflation, the threat of a recession also clouds the economy. The market participants will be eagerly looking out for the upcoming CPI release. 

The CME Fed Watch tool is currently indicating a 75% chance of another 75 bps interest rate hike. Another favorable CPI data might move the Fed’s aggressive stance.

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