The Big Short sequel? Michael Burry’s bearish bets on market indices

Michael Burry, famed for his uncanny market predictions showcased in “The Big Short,” has made another move, one that suggests he may be anticipating a downturn in the market.

The big bet against S&P 500 and Nasdaq 100

According to the latest securities filings, his firm Scion Asset Management has made bearish bets against two key market indices. The company has acquired put options against the Invesco QQQ Trust ETF with a notional value of $739 million and against the SPDR S&P 500 ETF with a value of $886 million.

It remains unclear due to regulatory frameworks how much was paid for these options or their current value, and whether they were held outright or as part of a larger trade.

Deciphering Burry’s strategy

Given Burry’s historical feats, namely his well-timed bet against the U.S housing market that predicted the 2008 financial crisis, these recent moves have set the investment community abuzz.

It’s worth noting that the S&P 500 and Nasdaq 100 have shown remarkable resilience this year, gaining about 17% and 39% respectively. Moreover, notable giants like Nvidia and Meta Platforms have been key drivers of this year’s impressive rally.

Adding another layer of intrigue, the filings revealed that Burry’s fund also offloaded its investments in Chinese e-commerce behemoths JD.com and Alibaba Group Holdings, along with regional banks like PacWest and Western Alliance Bancorp.

Implications for the cryptocurrency sphere

While Burry’s moves primarily revolve around traditional market structures, their potential repercussions for the cryptocurrency space cannot be ignored. Historically, significant downturns in traditional markets have had cascading effects on digital currencies.

Despite the macroeconomic moves, the crypto market has shown resilience. Bitcoin continues to hold below the $29,400 mark, demonstrating the asset’s stability. Other major cryptos like Ethereum, Cardano, Solana and Dogecoin have seen minor fluctuations, further emphasizing the dynamic nature of the crypto market.

New long positions highlighted

The recent disclosures also showcased the fund’s bullish stance on several firms. Scion Asset Management augmented its stake in the luxury online market, RealReal Inc, by an impressive 100%.

Furthermore, it revealed fresh investments in iHeartMedia, HanesBrands, and Warner Bros. Discovery. Interestingly, while iHeartMedia and HanesBrands witnessed a dip of 16% or more this year, Warner Brothers Discovery surged by approximately 43%.

In a move that perhaps showcases diversification, the firm acquired 10,000 shares of the iShares MSCI Japan ETF, enjoying a 13.5% rise this year.