Billionaire John Paulson calls cryptocurrencies a bubble

John Paulson, famed for his successful bet against the mortgage-backed securities market in 2007, told Bloomberg in an interview that cryptocurrencies are a bubble that will become worthless.

“I would not recommend investing in cryptocurrencies,” he said.

The publication noted that after the peak of $38 billion in Paulson’s assets under management in 2011, they shrank to predominantly his personal funds of $9 billion, which he manages as part of his family office.

The billionaire prefers gold as a hedge asset to Bitcoin. In his view, the current 25% expansion of the money supply will push inflation higher than expected, fueling frenzied demand for the precious metal.

“Cryptocurrencies are a finite supply of air. There is no value in any digital asset other than its limited supply.”, the investor explained.

Paulson rejected the idea of shorting cryptocurrencies after claiming that their price would crash to zero as liquidity inflows dried up.

“They have unlimited downside potential. If I am right in the long run, in the short run I’ll be left with no pants because of the excessive volatility.”, the billionaire explained.

Earlier in May, Charlie Munger, Warren Buffett’s ally, told of his hatred for bitcoin. In February, the legendary investor himself reiterated the thesis that digital assets have no value.

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