John Paulson warns crypto traders against grave risks
American billionaire investor John Paulson, who is the president and portfolio manager of New-York-based investment firm Paulson & Co., shared his ideas about cryptocurrencies and bitcoin in particular. From his viewpoint, the outlook is rather gloomy.
Expanding on the prospects of the flagship digital token, the investor described it in vivid words: “a limited supply of nothing”, “a bubble”, “worthless”, “dried up liquidity”, “a fall to zero”. To sum up, the billionaire is certain that the crypto hype is doomed to failure in the near future. So, traders who jumped on the crypto bandwagon will inevitably incur heavy losses. A lot of market participants took in his forecasts with gravity because John Paulson is a highly efficient investor. He alone managed to crash the US mortgage market during the US financial crisis, betting against it in 2008. His strategy brought him a fortune.
“Cryptocurrencies, 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,” he said, albeit giving no detail on when this could happen.
Nevertheless, he advised traders not to go short on bitcoin right away owing to its extreme volatility. Besides, he recommends investing in the gold bullion because of a sparse supply of physical gold.
Interestingly, one of the officials at the People’s Bank of China echoed the views of the American billionaire. Last week, the official said that bitcoin has no intrinsic value and cannot be authorized as legal tender. Thus, China’s central bank again confirmed that it is not going to soften its stance towards cryptocurrencies.