finance

The AI Bubble Is Here, And Michael Burry Just Shorted It. But What About the Crypto Crash That Came Before?

Hazem Abbas

11 Nov 2025 — 4 min read

Let’s go back to 2017. You remember that feeling? The world was buzzing. Bitcoin hit $20,000. Altcoins exploded. “HODL” wasn’t just a meme, it was a religion or a cult. People were buying tokens like they were lottery tickets for the future. Then came the crash. By 2018, we’d lost 80% of the gains in just months. Millions watched their savings vanish overnight.

That wasn’t just a correction. It was a reckoning.

Now fast-forward to 2025.

The same script is playing out, but this time, the stage is artificial intelligence. And the lead actor? Palantir Technologies (PLTR).

Yes, the same Palantir whose stock once seemed untouchable. Now, it’s under siege from one of the most feared investors in Wall Street history: Michael Burry.

The Man Who Called 2008, Now Warning Us About AI

You know him. He’s the guy who bet against the housing market in 2008 and made $100 million while everyone else burned. His story became The Big Short, a Hollywood blockbuster, a cautionary tale, a legend. Now, at 50 years old and still sharp as ever, Burry is doing it again.

His firm, Scion Asset Management, has quietly built a massive $912 million put option position against Palantir, equivalent to 5 million put contracts. That’s not a hedge. That’s a declaration of war on the current AI frenzy.

Put options mean he’s betting the stock will drop, hard. And when you’re placing bets worth hundreds of millions on a single company, you’re not guessing. You’re convinced.

When the SEC filing dropped, PLTR’s stock took a dive, down 7.94% in a single day. Not because of bad earnings. Not because of a scandal. Because the market heard the whisper: “Burry is shorting us.”

Palantir’s Response? “Bats, Crazy.”

Alex Karp, Palantir’s CEO, didn’t flinch. In a rare public statement, he called Burry’s move “absurd” and “bats--- crazy” , words that scream confidence… or denial?

He’s right about one thing: Palantir is doing well. Revenue up. Government contracts expanding. AI-powered platforms like Gotham, Foundry, and AIP are now used by militaries, banks, and Fortune 500s.

Over the past year, PLTR shares are up 207%. In six months alone? A 55.4% surge. Market cap? Nearly $415 billion.

But here’s the kicker: Palantir trades at over 700x earnings. That’s not growth. That’s faith.

And when valuation gets this stretched, even the smartest companies can’t survive the inevitable reset.

Why This Matters More Than You Think

This isn’t just about Palantir. It’s about the entire AI gold rush.

Nvidia? Trading at 70x earnings. OpenAI? Spending $1.4 trillion on infrastructure.
Cloud giants (AWS, Azure, Google Cloud)? Seeing slowing growth despite pouring billions into AI data centers.

There’s a loop:
Nvidia sells chips → Microsoft & Oracle fund OpenAI → OpenAI rents cloud power from those same companies.

It’s self-sustaining, but is it sustainable? I believe as many, it is not!

History doesn’t lie, and it keeps repeating itself. The dot-com bubble of 1999 saw similar patterns: hype, overvaluation, endless spending, and then collapse. The difference? This time, the stakes are higher. The tech is more powerful. The money is bigger.

And if Burry is right, we could be looking at the first major correction in the AI market, a moment where the real winners emerge, and the rest get wiped out.

So What Should You Do?

If you’re holding Palantir, don’t panic. But don’t ignore the warning signs either.

One analyst says PLTR could gain 50% more from here, based on long-term AI adoption.
Another says the market is pricing in perfection, and perfection doesn’t exist.

The truth? Burry isn’t saying AI is dead. He’s saying the price is insane.

Just like in 2017 with crypto, the danger isn’t in believing in the future, it’s in paying too much for it today.

"The fundamentals won’t catch up to the hype."
— Michael Burry

That line should haunt every investor.

So ask yourself: Are you investing in innovation, or in a bubble?

Because if history repeats itself, the next crash won’t come from a glitch in a blockchain. It’ll come from a single sentence in an SEC filing:
"Michael Burry is shorting the future."