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Billionaire hedge fund manager John Paulson, famed for making a fortune betting against the U.S. housing market, says that cryptocurrencies are a bubble that will prove to be āworthless.ā While he sees unlimited downside to crypto, he will not short bitcoin, however. āEven though I could be right over the long term, in the short term, Iād be wiped out,ā he explained.
Famous Investor John Paulson Predicts Crypto Will Be Worthless
John Paulson, the president and portfolio manager of U.S. investment firm Paulson & Co., is an American billionaire hedge fund manager who became world-famous in 2007 by shorting the U.S. housing market. He foresaw the subprime mortgage crisis and bet against mortgage-backed securities by investing in credit default swaps.
Paulson shared his views on cryptocurrency and bitcoin on Bloomberg TV Monday in an interview with Carlyle Group founder David Rubenstein.
Responding to the question of whether he is a believer in cryptocurrency, Paulson affirmed: āNo, Iām not.ā
He elaborated: āI would say that cryptocurrencies are a bubble. I would describe them as a limited supply of nothing. So to the extent thereās more demand than the limited supply, the price would go up. But to the extent the demand falls, then the price would go down. Thereās no intrinsic value to any of the cryptocurrencies except that thereās a limited amount.ā The billionaire hedge fund manager added:
Cryptocurrencies, regardless of where theyāre trading today, will eventually prove to be worthless. Once the exuberance wears off, or liquidity dries up, they will go to zero. I wouldnāt recommend anyone invest in cryptocurrencies.
Paulson was further asked āwhy not put a big short of some type on cryptocurrenciesā since he believes that they will become worthless.
He explained: āThe reason we shorted subprime in size was because it was asymmetrical ā shorting a bond at par that has a limited duration that trades at a 1% spread of Treasuries. So you canāt lose more than the spread in the duration.ā He continued:
In crypto, thereās unlimited downside. So even though I could be right over the long term, in the short term, Iād be wiped out. In the case of bitcoin, it went from $5,000 to $45,000. Itās just too volatile to short.
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Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.