After the FTX crash, the cryptocurrency market is struggling to straighten out. In addition, the stock market crash and the network of relationships in the market increase the risk of contamination. On the other hand, there is a market where the collapse in the cryptocurrency market benefits. Michael Burry, nicknamed “The Big Short”, predicts that gold will rise due to the risk of contagion by crypto scandals.
“When the crisis in crypto is combined with the risk of contagion, a golden day is born”
As you follow on Kriptokoin.com, the crypto market sleeps with FTX and leaves with FTX. New scandals related to the collapse are emerging, increasing the risk of contagion. American investor and hedge fund manager Michael Burry, commonly known as ‘The Big Short’, shared his view on the future of gold following the downturn in the crypto market.
The Crisis Oracle is famous for predicting the 2008 financial crisis. He has an opinion that gold prices will rise, especially after crypto scandals. In a now-deleted post on Nov. 15, Burry argues that when crypto-related scandals combine with the risk of a ‘contagion’, gold’s moment of rise has come.
— Michael Burry Archive (@BurryArchive) November 15, 2022
Meanwhile, gold continues to recover despite prevailing macroeconomic factors driven by rising inflation and possible continued interest rate hikes. Crisis Oracle’s comments came on top of this. Especially gold, in the last session, saw the highest level of the last three months with $ 1,784. At press time, spot gold is trading at $1,772, down 0.37%.
Gold price chart / Source: KitcoCryptocurrency market remains depressed
It is worth noting that the crypto space has been affected by numerous scandals that have contributed significantly to the falling prices. For example, in May, the market was hit hard by the Terra (LUNA) ecosystem crash. Then came widespread bankruptcy filings that affected companies like Celsius Network and Voyager Digital.
The biggest scandal, however, involves cryptocurrency exchange FTX, which has been hit by a liquidity crunch that has faced former CEO Sam Bankman-Fried with allegations of embezzlement of clients’ funds. Burry, meanwhile, warned earlier that with the subdued market conditions, they should prepare investors for a possible stock and crypto crash. According to the founder of Scion Asset Management, S&P 500, Nasdaq and Bitcoin (BTC) prices represent multiple compressions recently.
At the same time, Bitcoin was trading above the critical level of $20,000 when the FTX crisis broke out. However, the collapse of the stock market pushed BTC to the levels of $ 15 thousand. Thus, the market was also significantly affected. Moreover, the crisis destroyed the investor’s hopes for a possible market bottom. At press time, BTC was trading at $16,556. However, the performance of gold satisfied its investors. Accordingly, advocates of the precious metal argue that Bitcoin has a long way to go before it can be considered a hedge against inflation.
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