Veteran hedge fund manager John Paulson says that he’s not a believer in crypto and that the digital asset markets offer no value except a limited supply.
In an interview with fellow billionaire investor David Rubenstein, Paulson says cryptocurrencies are a bubble with little to no intrinsic value.
“No I’m not a believer in cryptocurrencies in that I would say that cryptocurrencies are a bubble, and I would describe cryptocurrencies as a limited supply of nothing. So, to the extent there’s more demand than the limited supply, the price will go up. But to the extent that demand falls then the price will go down. There’s no intrinsic value to any of the cryptocurrencies, except that there’s a limited amount.”
Paulson made billions for his New York-based investment management firm in 2007 when he bet against the US subprime mortgage market. In contrast to the mortgage market, Paulson says crypto has unlimited downside and too much volatility to make it worth trying to short sell.
“When we looked for the subprime, the reason why we shorted the subprime in size was because it was asymmetrical… In crypto, there’s unlimited downside. So even though I could be right over the long term, in the short term, as in the case of Bitcoin, it went from $5,000 to $45,000. I would be wiped out on the short side. So it’s just too volatile to short.”
Paulson’s sentiments echo those of fellow mortgage market short seller Michael Burry, the central figure of The Big Short. In February, Burry predicted that hyperinflation would prompt the government to “squash” Bitcoin and gold as competitors to the dollar. However – like Paulson – Burry noted he wasn’t trying to short BTC.
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