John Paulson, a well-known billionaire hedge fund manager, is a staunch opponent of cryptocurrency investments.
On Monday, August 30, Paulson spoke with Bloomberg TV in an in-depth interview, describing cryptocurrencies as a “bubble” whose value would eventually plummet to zero.
“I would say that cryptocurrencies are a bubble. Regardless of where they’re trading, today will eventually prove to be worthless. Once the exuberance wears off, or liquidity dries up, they will go to zero. I wouldn’t recommend anyone invest in cryptocurrencies,”
Paulson referred to crypto assets as having a “limited supply of nothing,” referring to a fixed number of coins that certain currencies have, such as Bitcoin’s 21-million-coin ceiling — but others do not.
When questioned why he doesn’t just short cryptocurrencies, Paulson explained that the market is too unpredictable, making it too hazardous for him to short or gamble against. He singled out cryptocurrency’s high volatility, claiming that a short bet might bankrupt him in the near term, even if he was proven correct in the long run.
According to Paulson, there is no end to the downside in crypto. So, while he could be correct in the long run, he’d be wiped out in the short run.
For the time being, Paulson told Bloomberg that he is banking on another alternative asset, gold, as a haven. He said that he prefers to acquire gold, claiming that the precious metal performs well during rising inflation. Moreover, he indicated that he would continue to acquire gold as the money supply grows in anticipation of growing inflation.
Paulson, the hedge fund manager who earned a $20 billion fortune by correctly forecasting the collapse of the US housing market in 2008, now believes that cryptocurrencies will go to zero.
Hedge Funds Are Interested
Paul Tudor, a well-known hedge fund manager, is a Bitcoin investor. Brevan Howard, a European hedge fund management business, on the other hand, has invested a tiny portion of its money in cryptocurrencies. However, its millionaire co-founder, Alan Howard, is a strong advocate of the cryptocurrency industry.
In February. Bill Miller, a seasoned US investor and hedge fund manager has approved a 15 percent investment in Grayscale’s Bitcoin Trust through his investment management business, Miller Value Partners.
In May, Ray Dalio, the founder, and co-chief investment officer of Bridgewater Associates, the world’s largest hedge fund business, stated that he had purchased some Bitcoins and preferred investing in Bitcoin over bonds.
Hedge funds are fully aware of cryptocurrencies‘ hazards as well as their long-term potential. The growing enthusiasm among hedge fund managers contrasts dramatically with widespread skepticism among traditional asset managers, who are concerned about crypto assets’ extreme volatility and regulatory uncertainties of crypto assets.