- US billionaire — John Paulson says cryptocurrencies are ‘worthless’.
- He says they exist in a bubble and will fall to zero once demand drops.
- Alternatively, he says that gold is a better option for investing.
The famous billionaire — John Paulson, believes that cryptos are not worth the hype. He believes that cryptocurrencies are a waste of time and does not recommend investors to invest in these digital assets.
The 65-year-old billionaire investor shares his thoughts on good investments with Bloomberg. Having made his fortune by betting against the US’s housing market over a decade ago, Paulson is certain about his current choices in investments.
Paulson Does Not Recommend Investing in Cryptos
To highlight, Paulson says he is not a fan of cryptocurrencies. In fact, he says that cryptos are a ‘bubble’. He elaborates by saying that cryptos are a limited supply of nothing. For instance, he says, until there is high demand over limited supply, the asset prices will go up.
However, once the demand falls, so will the price. He believes that cryptos do not hold actual intrinsic value and that they are only popular due to limited supply. All in all, he says that no matter where cryptos are trading today, eventually, they will all fall to zero. He says this is bound to happen as liquidity dries up or as popularity falls.
The Secret To Successful Investments
Based on this line of conversation, Paulson was asked why not benefit from big shorts on cryptos? To this, Paulson says that the secret behind his fortune is betting on asymmetrical trades. Ensuring a bet over an asymmetrical shorted subprime guarantees high returns and almost no loss.
In contrast, he claims that cryptos always sport an unlimited downside. Hence, no matter the long-term gain, it will certainly wipe out when it comes to short investing. For instance, Bitcoin flew from $5,000 to $45,000. This is simply too volatile to short he says.
Gold Still Holds Massive Potential
Paulson put a lot of money into gold investments after his infamous short. This earned him the title of ‘Gold Bug’. To this day, Paulson believes that gold is a great investment that always comes through in times of inflation. Usually, when inflation hits, people look for investments that take them outside of cash options.
In such cases, gold is always standing strong. Although gold too has its ups and downs, like supply and demand imbalances, it still shows more promise than cryptos. He believes this to be true as the gold market isn’t as volatile as that of the crypto market.
Good Investments Are in the Eyes of the Beholder
All in all, despite Paulson’s arguments, most traders would disagree with calling cryptos ‘worthless’. In a time where the economy was completely shot due to the Covid-19 pandemic, cryptos came out strong.
Most investors turned to cryptos during this time. When the economy began to fail them, cryptos became their saving grace. One of Paulson’s main arguments is that cryptos have no value. This is not accurate. Most cryptos have a purpose. Hence, they have solid use cases. It is very unlikely that all cryptos will eventually go off demand as many hold value and fulfill a purpose.
Therefore, while cryptos may not seem to be a good investment it the eyes of one investment billionaire, it certainly is worthy enough to draw the attention of many other investment titans. These include Elon Musk, Mark Cuban, Grayscale Investments, MicroStrategy, and many more.