Michael Burry Warns of 1987 Style Stock Market Crash as Arthur Hayes Predicts Bitcoin Rally

• Michael Burry warned the market could be nearing a major top, comparing the current rally to the setup before the 1987 stock market crash despite the S&P 500 hitting fresh record highs
• Arthur Hayes argued the AI investment boom resembles the 2008 credit crisis, saying excessive spending on data centers could eventually trigger a broader market correction
• While Burry remains bearish on equities, Hayes believes any AI-driven downfall could pave the way for monetary easing, creating a favorable position for Bitcoin price and the next crypto bull market

The stock market crash debate has returned just as US equities are pushing deeper into record territory. With the S&P 500 climbing on stronger-than-expected corporate earnings and easing oil prices, optimism is running high across Wall Street. Yet two well-known investors are urging caution. Michael Burry believes the rally resembles the conditions that occurred before the 1987 stock market crash. Meanwhile, Arthur Hayes argues today’s AI boom is creating a different kind of financial risk that could change the path of Bitcoin price.

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Michael Burry Says Today’s Rally Mirrors the 1987 Stock Market Crash

Michael Burry, best known for predicting the 2008 financial crisis, is not backing away from his bearish outlook. This comes despite the market’s latest surge. In a recent Substack post, he said it remains possible that markets could experience a 1987-type drop. He added,

“I continue to believe it is possible we are near a major top, and possible a 1987-type fall, but the S&P 500 making new highs likely will bring new money into the market.”

His warning arrived as the S&P 500 surged above 7,700 for the first time in history. This was further supported by stronger corporate earnings and falling oil prices as concerns over disruptions in the Strait of Hormuz eased.

Burry believes the current rally is feeding itself. According to him, lower market volatility is pushing volatility-targeting funds and momentum-driven investors to increase leverage. This creates conditions similar to previous market peaks.

The investor has maintained short positions against several stocks and sectors, including Nvidia, Palantir, Tesla, Micron, Caterpillar, Applied Materials, and the iShares Semiconductor ETF (SOXX). He noted that Nvidia remains the only short position currently under pressure while the others continue to perform as expected. Burry added,

“Again, shorting is not for everyone. I must short. Most should not.”

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Arthur Hayes Says an AI Bubble Could Drive Bitcoin Price Higher

While Burry sees growing downside risks for equities, BitMEX co-founder Arthur Hayes believes the AI investment frenzy resembles the 2008 credit crisis more than the dot-com bubble of 2000.

In a recent post on X, Hayes argued that investors are valuing trillions of dollars in AI infrastructure spending as technology growth instead of treating it like large-scale real estate investment. He believes banks, private credit funds, and governments are financing data centers and power projects in ways that point towards credit expansion seen before the global financial crisis.

Hayes expects that excessive investment could eventually trigger a correction. But, unlike Burry, he believes the response could include monetary easing that brings liquidity into financial markets. In his view, this environment would create a favorable backdrop for Bitcoin price and potentially start the asset’s next major bull cycle.

The market continues to celebrate new highs. But warnings of a possible stock market crash in 2026 are circulating, along with chatter around the AI boom. Investors are confused if today’s rally marks the start of another leg higher or the peak of an overheated cycle.

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