Financier John Paulson does not believe in the future of cryptocurrencies
John Paulson, the founder of hedge fund Paulson & Co. has come out openly against cryptocurrencies. 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 limited supply, prices rise. But to the extent that demand falls, the price falls. There isno intrinsic value to any of the crypto-currencies,“ argues John Paulson.
The investor recycles one of the most hackneyed theories about cryptocurrencies. That theory is that the digital currency market is just a huge speculative bubble. Since Bitcoin’s inception, many detractors have regularly prophesied the bubble would burst and the currency’s price would collapse.
“Cryptocurrencies, no matter what price they are trading at today, will eventually prove worthless. Once the exuberance wears off or liquidity dries up, they will go to zero. I wouldn’t recommend anyone to invest in crypto-currencies,“ summarizes the financial speculator.
John Paulson is essentially known for having made a fortune by anticipating the subprime crisis in 2007. By betting on the collapse of the real estate market, the trader is one of the few to have benefited from the economic crisis. He earned 20 billion dollars in 2007 and 2008. Paulson massively invested part of his earnings in gold in 2009 before the price of the golden metal soared.
On the same subject: “I don’t have cryptocurrencies and I will never have them” says Warren Buffet
Trader recommends investing in gold to protect against inflation
Convinced that cryptocurrencies will collapse sooner or later, John Paulson nevertheless refuses to bet down against digital currencies. The investor believes that the market is far too volatile to expect to profit in this way.
” Even if I could be right in the long run, in the short run I would be devastated. In the case of Bitcoin, it went from $5,000 to $45,000. It’s just too volatile, “ says the American trader.
In the interview, John Paulson says he is worried about fiat currency inflation. In order to revive the economy following the health crisis, central banks have indeed injected billions of dollars in stimulus packages. As a result, inflation in the Eurozone reached 3.0% year-on-year, its highest level in 10 years. In concrete terms, prices are rising and <a href=”https://cryptoast.fr/monnaie-fiat-definition-explications/”>Fiat money is slowly losing its value.
” The money supply grew by about 25% last year and the best indicator of inflation is the 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 points out that « Gold does 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 staunch supporter of gold, the trader seems unaware of the commonalities between the precious metal and Bitcoin. Like gold, the mother of all cryptocurrencies is available in limited quantities. The maximum amount of tokens to be mined was set at 21 million by Satoshi Nakamoto, the currency’s mysterious creator.
In many countries hit by an economic crisis and inflation of the national currency, Bitcoin has become a safe haven, just like gold or real estate. This is particularly the case in Argentina, Lebanon, Turkey or Nigeria.
” In emerging markets, many are turning to cryptocurrency to preserve their savings in the face of currency devaluation,” Chainalysis’ Global Cryptocurrency Adoption Index 2021 recently revealed.
Going further – Is Bitcoin a better safe haven than gold?
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About the author: Florian Bayard