‘Big Shot’ Michael Burry’s AI bubble warning also extends to crypto: Expert

After popular investor and hedge fund manager Michael Burry warned a bubble is forming in the artificial intelligence (AI) sector, an AI entrepreneur has warned that the crypto market has entered a “casino reality.”

Burry, popular for shorting the housing market bubble collapse in 2008, recently cautioned traders against an AI bubble and singled out, in particular, Nvidia (Nasdaq: NVDA), Meta (Nasdaq: META), Oracle (NYSE: ORCL), and Palantir Technologies (Nasdaq: PLTR).

Related: Economist sends startling warning after ‘Big Short’s AI call

The 2008 episode was the subject of the Hollywood film The Big Short (2015) in which actor Christian Bale played Burry. The legendary trader had shorted overvalued sectors earlier too, such as shorting the dot-com bubble burst in 2000.

But Burry has now deregistered his hedge fund, Scion Asset Management. He said:

“My estimation of values in securities is not now, and has not been for some time, in sync with the markets.”

Eric Balchunas, the senior ETF analyst at Bloomberg, responded to the development and said nobody, including those who get portrayed by Christian Bale, knows the future.

Ahmad Shadid, founder of O Foundation, a Swiss-based AI research lab echoed similiar sentiments but about the rallying crypto market which has come to a halt.

He told TheStreet Roundtable, the crypto market has gone from a more “traditional” run in 2024 — with altcoins and crypto projects with actual utility gaining traction and retail investment — to a “completely crumbled, degen, casino reality” — only meme coins and such tokens gaining the attention of crypto retail.

Crypto retail traders have increasingly realized that they are the exit liquidity, said Shadid.

There is “blatant” manipulation of charts and there are so many pump-and-dump coins, so traders don’t bother to go for the highest-valued coins to make 2x-5x maximum, he added.

Both crypto retail traders and founders have realized that VCs and market makers are only milking them, Shadid opined.

The market is now in an “almost nuclear winter” where some projects with little adoption raise exorbitant amounts of money, only to end up being “forgotten and unused,” he said.

If a project doesn’t have a token with 500x potential, it doesn’t find any takers even if it has actual utility, he expressed his frustration.

Shadid said a lot of projects, including his own, now view crypto as a “toxic space” in which nothing matters other than the token.

The founder concurred with Burry’s view that we are in an AI bubble but said a bearish outlook on Nvidia isn’t substantiated enough. However, he said the company’s valuation is getting dangerous.

In fact, he is of the view that if and when the AI bubble bursts, useless AI companies operating at the App layer would collapse first. This, in turn, would affect Nvidia.

Nonetheless, Shadid didn’t contend the fact that there is no going back from the “AI-native world.”

This story was originally reported by TheStreet on Nov 14, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.