Several weeks ago, Michael Burry, the “Big Short” investor who famously predicted the 2008 housing crash, issued a fresh warning about the explosive boom in artificial intelligence (AI).
Burry believes markets are once again repeating the same patterns of blind optimism that preceded past major bubbles. But not everyone agrees, with Ark Invest CEO Cathie Wood pushing back strongly against the idea that AI is overheated.
Michael Burry says AI bubble 'rhyming' housing crisis
Burry deregistered his hedge fund Scion and explained why he believes the AI narrative is becoming dangerously euphoric.
"Feb 21, 2000: SF Chronicle says I’m short Amazon Greenspan 2005: “bubble in home prices ...does not appear likely.” Powell '25: “AI companies actually..are profitable..it's a different thing" I doubted if I ever should come back. I'm back. Please join me," Burry wrote in a Substack post.
By referencing former Fed Chair Alan Greenspan’s 2005 comments minimizing housing risks, Burry is signaling that today’s assurances about AI profitability sound eerily familiar.
As reported by CNBC, Burry now sees history “rhyming again,” with investors assuming exponential growth, overlooking profitability concerns, and pouring capital into AI firms on the belief that the technology will “rewrite the economy.”
Burry has acted on these views. He has openly shorted Nvidia (NASDAQ: NVDA) and Palantir (NASDAQ: PLTR), two central names in the AI rally.
Why Burry’s AI fears matter for crypto
AI and crypto have increasingly become intertwined in market cycles, both heavily influenced by investor sentiment, liquidity conditions, and expectations of technological transformation.
Both markets tend to rise when interest rates fall, and both struggle when liquidity tightens. They also share speculative tendencies — rapid capital inflows driven by “future potential” rather than present-day earnings.
Today, AI and blockchain are merging more than ever:
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AI models require decentralized storage and compute
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Blockchain ensures data integrity for AI systems
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New “AI tokens” such as Bittensor (TAO), Render (RENDER), Near (NEAR), Fetch.ai (FET), and SingularityNET (AGIX) sit at the intersection of both industries
If AI enthusiasm fades, funding for decentralized AI ecosystems could also tighten.
Even Nvidia’s dominance in AI compute links the two: GPU availability, mining hardware demand, and blockchain network costs are all indirectly influenced by AI market cycles.
Michael Burry attends the "The Big Short" New York premiere at Ziegfeld Theater on November 23, 2015 in New York City. (Photo by Jim Spellman/WireImage) More News:
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Cathie Wood says AI is nowhere near a bubble
But Cathie Wood strongly disagrees with Burry’s outlook. Speaking during ARK Invest’s November Fund mARKet Update Webinar on Nov. 22, Wood argued the opposite — that markets are dramatically underestimating how early the AI transformation still is.
“We think this AI story has just begun,” Wood said. “We are in the first innings of a long-term technological revolution.”
She also addressed criticism that AI has not yet produced visible productivity gains. Wood cited an MIT paper that reached a similar conclusion but argued the lag is a normal part of corporate adoption cycles.
“The nuance here is that for enterprises to restructure and transform completely, which they will have to do in this new age, is hard work and it will take time,” she explained. “And yet on the consumer side, it is flourishing.”
As evidence, Wood pointed to Palantir’s 123% growth in U.S. commercial revenue last quarter, calling it a sign that enterprise AI demand is accelerating behind the scenes.
“If Palantir is any indication — and we think it is — CEOs are saying, ‘We’ve got to do this or we’re going to lose our competitive edge.’”
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Cathie Wood also clarifies ARK’s Bitcoin outlook
Wood further addressed confusion around ARK’s recent Bitcoin price targets. In a CNBC appearance on Nov. 6, she said the firm had lowered its bull-case estimate for 2030 from $1.5 million to $1.2 million.
“I said all other things equal. Well, all other things have not been equal. The stablecoins have accelerated, taking some of the role away from Bitcoin, as expected. But the gold price appreciation has been far greater than we expected. So net-net, our bull price really hasn’t changed.”
At the time of reporting, Bitcoin was marginally up by 0.5% in the past 24 hours, trading at $86,664.57. Gold, meanwhile, was up 0.74%, trading at $4,125.85 per ounce.
Related: Big Short Michael Burry Says Cryptocurrencies Have Original Sin
This story was originally published by TheStreet on Nov 25, 2025, where it first appeared in the Technology News section. Add TheStreet as a Preferred Source by clicking here.
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