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 “worthless.” While he sees unlimited downside to crypto, he will not short bitcoin, however. He explained that even though I might be right in the long-term, in the short-term, I would be “wiped out.”

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 was able to see the subprime mortgage crisis coming and he invested in credit default swaps to counter mortgage-backed securities.

Paulson spoke out on Monday about cryptocurrency and bitcoin in an interview with David Rubenstein, founder of Carlyle Group.

Paulson responded to the question about whether he believes in cryptocurrency.

He said: “I would call cryptocurrencies a bubble. They are a limited supply. The price will go up if there is more demand than supply. The price would fall if the demand is lower. “There is no intrinsic value to any cryptocurrency, except that there is a small amount.” This was added by the billionaire hedge fund manager

Cryptocurrencies, regardless of where they’re trading today, will eventually prove to be worthless. They will become worthless once the exuberance fades or the liquidity runs dry. I would not recommend that anyone invest in cryptocurrency.

Paulson was also asked why not put a large short of some kind on cryptocurrencies, since he believes they will be worthless.

He said that subprime was shorted in size because it was asymmetrical. Shorting a bond at par with a short duration that trades at an 1% spread of Treasuries was shorting a bond that is at par and that trades at par at par. You can’t lose more that the spread in the duration.” he continued.

Cryptography has many downsides. Even though I might be right in the long-term, my short-term results would be disastrous. In the case of bitcoin, it went from $5,000 to $45,000. It is too volatile to be shorted.

What do you think about John Paulson’s comments on bitcoin and cryptocurrencies? Comment below.

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