Financier John Paulson doesn’t believe in the future of cryptocurrency
John Paulson, the founder of the hedge fund Paulson & Co., is openly against cryptocurrency. In an interview with Bloomberg, the American billionaire firmly believed that digital currencies such as Bitcoin (BTC) have no future.
“Cryptocurrencies are a bubble. I would describe them as a limited supply of nothing. So, to the extent that there is more demand than there is limited supply, prices rise. But as the demand goes down, the price goes down. There is no intrinsic value in any of the cryptocurrencies, ”says John Paulson.
The investor recycles one of the most well-worn theories about cryptocurrencies. The theory is that the digital currency market is just a huge speculative bubble. Since the creation of Bitcoin, many detractors have regularly prophesied the bursting of the bubble and the collapse of the currency’s price.
“Cryptocurrencies, no matter what price they are trading at today, will eventually prove to be worthless. Once the exuberance wears off or the liquidity dries up, they will drop to zero. I would not recommend anyone to invest in cryptocurrencies, ”summarizes the financial speculator.
John Paulson is mainly known for having made his fortune anticipating the subprime mortgage crisis in 2007. By betting on the collapse of the real estate market, the trader is one of the few to have taken advantage of the economic crisis. He earned $ 20 billion in 2007 and 2008. Paulson invested heavily in part of his earnings in gold in 2009 before the soaring price of gold.
👉 On the same subject: “I have no cryptocurrencies and I will never have any” declares Warren Buffet
The trader recommends investing in gold to protect against inflation
Convinced that cryptocurrencies will collapse sooner or later, John Paulson refuses to bet on the downside against digital currencies. The investor believes that the market is far too volatile to hope to profit from it in this way.
“Even if I could be right in the long term, in the short term I would be devastated. In the case of Bitcoin, it went from $ 5,000 to $ 45,000. It’s just too volatile, ”explains the American trader.
In the interview, John Paulson expresses concern about fiat currency inflation. In order to revive the economy following the health crisis, central banks have indeed injected billions of dollars into stimulus plans. As a result, inflation in the euro area reached 3.0% year on year, its highest level in 10 years. Concretely, prices increase and fiat currency gradually loses its value.
“Money supply grew by around 25% last year and the best indicator of inflation is money supply. So I think inflation is well above current expectations, ”warns John Paulson.
In this context, the famous investor recommends investing in traditional safe havens, such as gold. Paulson recalls that “gold is doing very well in times of inflation”. According to the trader, real estate is also an excellent safe haven for most people.
“The best investment for the average person is to buy their own home,” advises the billionaire.
A strong supporter of gold, the trader seems to ignore the commonalities between the precious metal and Bitcoin. Like gold, the mother of cryptocurrencies is available in limited quantities. The maximum amount of tokens to be mined has been set at 21 million by Satoshi Nakamoto, the mysterious creator of the currency.
In many countries hit by an economic crisis and the inflation of the national currency, Bitcoin has also established itself as a safe haven, like gold or real estate. This is particularly the case in Argentina, Lebanon, Turkey and Nigeria.
“In emerging markets, many are turning to cryptocurrency to preserve their savings in the face of currency devaluation,” Chainalysis’s 2021 Global Cryptocurrency Adoption Index recently revealed.
👉 To go further – Is Bitcoin a better safe haven than gold?
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About the author: Florian Bayard