In 2008’s financial crash, a billionaire subprime short-trader stated that digital assets had a “limited supply” of nothing.
In a recent interview, subprime short investor and billionaire portfolio manager John Paulson criticized the volatile nature of digital assets while advocating for investments in traditional safe-havens such as gold.
Paulson & Co was founded in New York by Paulson & Co. Paulson, who had a successful short position, was a major beneficiary of the 2008 collapse of the United States housing market.
Paulson made the decision to transfer his hedge fund to a family office following a 76.5% decrease in assets under management from $38 billion in 2011 and $9 billion in 2019.
Paulson was interviewed about the emerging cryptocurrency market. He claimed that there is a limited supply of no assets and that they have no intrinsic value. He also mentioned the volatility of the space, compared to the stable traditional markets, as reasons to avoid investing.
He also spoke out about his inability identify the same asymmetrical patterns he used in his famous trade a decade ago. This was an opportunity where there seemed to be little or no downside risk and great upside potential.
Paulson ended his thoughts about believing in cryptocurrency with the harsh response: “Cryptocurrencies will eventually prove to have no value, regardless of where they are trading today.” They will become worthless once the exuberance fades or liquidity runs dry. I would not recommend that anyone invest in cryptocurrency.
Paulson was asked whether gold is a good investment strategy in today’s financial climate. He noted that there has been an increase in money supply to the markets as a result of the COVID-19-related economic downturn, which was “about 25% last year,” and believed that this is the best indicator for future inflation.
Paulson’s natural inclination towards gold, a safe-haven asset, will serve as a hedge against the expected decline in traditional fiat currencies over the next few years.
Paulson’s injurious opinion of the core capabilities of cryptocurrencies echoes the sentiment of fellow billionaire investor Warren Buffet, who claimed that they were “rat poison squared” in a verbal tirade in 2018.