In the 17th century, tulip mania took over Dutch society, and speculators paid dearly for it. Michael Burry believes Bitcoin is a modern-day version of tulip mania. Not only is he bearish on Bitcoin, but he also compares the hype around the digital currency to what happened in Holland during the 17th century: tulip mania. Bitcoin has no shortage of bullish and bearish investors.
Although there are some people who believe it’s going to the moon and will hit more than $1 million in the future, there are others who believe that it’s destined to crash. Michael Burry, who is best known for predicting the housing crash that occurred nearly two decades ago, belongs to the latter category. It’s worse than a tulip bulb, because this has enabled so much criminal activity to go deep under. The big point Burry is making is that Bitcoin’s valuation is unsustainable and has reached absurd levels, which is why it’s comparable to the tulip mania that occurred centuries ago.
The tulip mania is a classic example of what can happen when speculation runs rampant. It’s a bubble that Michael Burry compares Bitcoin to, with one exception. The tulip bubble lasted no more than a few years, between 1634 and 1637. Speculation comes down to the greater fool theory, where the main reason for buying an asset is in the hopes that someone more foolish than you will pay more money for it in the future.
Leave a Reply