According to the well-known investor Michael Burry, aka “Big Short”, the purchase of bitcoin by Tesla would be a diversion to distract attention from the company’s problems in China.
However, it should be noted that there is a real aversion between Elon Musk and the short-sellers, and this aversion in many cases is reciprocated.
Michael Burry is the founder of the hedge fund Scion Capital, and is known for his bearish positions on Tesla. Moreover, his Scion Asset Management was involved in the GameStop case, as in April 2020 they bought 5.3% of the company’s shares at a price between $2 and $4.2. After that, Burry sent very harsh letter to the company’s board of directors to convince them to buy back the shares.
It is likely that this was the real fuse that triggered the GameStop case, in which Musk also took part by publicly siding with the rival retail investors of the hedge funds.
Therefore Burry’s bitterness towards Musk is much more than a mere hypothesis.
Michael Burry’s frustration with Tesla and Bitcoin
Moreover, to define only “a diversion” an investment worth a billion and a half dollars, made with about 8% of the entire liquidity of the company, seems resoundingly reductive.
That said, Burry has been shorting Tesla stock since December, when it was worth less than $700, and given that the current price is holding above $800 he must have built up some frustration with the possible losses.
In a tweet later removed he wrote:
“Chinese regulators summon Tesla on quality issues as consumers complain about quality … but $TSLA bought $BTC. In my mind’s eye, so much #digitalconfetti”.
He also went on to add that the correlation coefficient between Tesla’s share price and bitcoin’s share price has been 0.951967 over the past six months, imagining that investors on Tesla stock and bitcoin could drive this correlation to parity.
To all of this, he adds that the markets, in his view, are at a critical juncture, where a big rise could be followed by a big fall. For this reason, he expects a market crash in the coming months.