On August 30 in an interview billionaire hedge fund manager John Paulson while speaking at an episode of 'Bloomberg Wealth with David Rubenstein' described cryptocurrencies as "bubble" that would prove to be "worthless". He added saying no intrinsic value attached with Bitcoin and other cryptocurrencies except for a "limited amount" and will eventually go to zero.

In 2008 at the time of the financial crisis, the co-founder of Paulson & Co earned $20 billion by short trading against the American real estate housing market. Paulson & Co is a New York-based firm launched in 1994. Paulson was a historic beneficiary of the United States housing financial market collapse of 2008 after placing a legendary successful short position. He did this by betting on subprime mortgage bonds. “In crypto, there’s an unlimited downside. So even though I could be right over the long term, in the short term, I’d be wiped out. In the case of Bitcoin, it went from $5,000 to $45,000. It’s just too volatile to short,” he said.

After a 76.5% reduction in assets under management, from a peak of $38 billion in 2011 to $9 billion in 2019 Paulson recently took the decision to pass his hedge fund into a family office. Paulson praised gold, arguing that it “does very well in times of inflation” because there is a “very limited” amount of investable gold.

Reasons Paulson gave for deterred from investing in crypto market.

In the interview, Paulson was asked about his views on the emerging cryptocurrency market. To which he replied by discouraging investment in crypto market and the reason he referred as the heightened volatility of the crypto space in comparison with the relatively stable traditional markets.

He also mentioned his inability to identify the same asymmetrical patterns noted in his legendary trade a decade earlier, an opportunity where the market seemingly offered little to no downside risk, while providing enormous upside potential.

Other person who cited against crypto market investment

Billionaire investor Warren Buffet in 2018 claimed against capabilities of cryptocurrencies saying they were "rat poison squared" in a verbal tirade.

Indrani Bose

CBW - External Analyst

INDIA