Despite the fact that the crypto market has stood the test of time, some billionaire investors do not believe it is a place worth the investment, of such, is billionaire investor John Paulson who has called crypto a worthless bubble.
John Paulson, a billionaire investor who correctly forecast the subprime catastrophe a decade ago, has slammed crypto investors.
Now, 14 years after the 2008 financial crisis, Paulson is concerned about the crypto space’s excessive speculation.
Paulson, 65, said cryptocurrencies are a bubble that would “eventually show to be worthless” on an edition of “Bloomberg Wealth with David Rubenstein.”
He went on to say, “I wouldn’t encourage anyone investing in cryptocurrencies.” It isn’t the first time that crypto assets have been chastised by rich investors. Warren Buffett, for example, has harshly attacked digital assets.
Crypto assets, on the other hand, have outperformed traditional asset classes like gold by a large margin over the last decade. Furthermore, Paulson’s track record after his “best transaction” in 2008 hasn’t been particularly impressive.
Paulson’s hedge firm had to convert to a family office last year, with assets plunging to $9 billion in 2019 from a whopping $38 billion in 2011.
Gold versus cryptocurrency
Despite the fact that cryptocurrencies have outperformed gold by a large margin, Paulson wants to stick with the old school and invest in gold. Maybe he’ll get along swimmingly with Peter Schiff.
Apart from the jokes, Paulson stated that as inflation rises, they will tend to move away from fixed assets and cash and that gold is the best place to be.
Furthermore, he anticipates inflation to be higher than current predictions, citing the Fed’s 25 percent increase in the money supply. As a result, Gold! When asked if he believed in cryptography, Paulson responded, “I believe in cryptography.”
“No, I’m not. And I would say that cryptocurrencies are a bubble. I would describe them as a limited supply of nothing. So to the extent, there’s more demand than the limited supply, the price would go up. But to the extent the demand falls, then the price would go down. There’s no intrinsic value to any of the cryptocurrencies except that there’s a limited amount”.
He went on to say that cryptocurrencies will eventually lose their value. And, according to Paulson, once the market’s liquidity runs out, it’ll drop to zero. When asked if he is shorting cryptocurrency at this time, Paulson said:
In crypto, there’s an unlimited downside. So even though I could be right over the long term, in the short term, I’d be wiped out. In the case of Bitcoin, it went from $5,000 to $45,000. It’s just too volatile to short.
