Investment tycoon Draken Miller: The market's "extreme frenzy" inflation poses a huge threat

Investment mogul Stan Druckenmiller said the market was in an "extreme frenzy" and rising inflation posed a huge threat.

In an interview Wednesday, Draken Miller said inflation could reach 5-10 percent over the next four to five years, creating an environment that has led to a surge in valuations. He said there was also a risk of deflation.

"Everybody loves to party, but it's inevitable that after a big party there will be a hangover," he says. "We're in a state of extreme fanaticism."

U.S. stocks have fallen over the past three trading days, with technology stocks accelerating their decline. The Nasdaq 100 index fell 11 percent from a record high set last week before entering Wednesday. Safe-haven demand pushed U.S. Treasury yields down and the dollar rose.

When the stock market rose in June, Drakenmiller also said he was "too cautious" because he thought the government stimulus package would not be enough to offset the impact of the new crown epidemic.

Draken Miller was once the chief strategist for billionaire philanthropist George Soros. He changed his hedge fund to the Duquesne family office in 2010. According to the Bloomberg Billionaires Index, his net worth is estimated at $5.8 billion.