“Bitcoin is a bubble” is something that has been tossed around a lot since the last bull run began in 2017. Many prominent figures in the financial industry took this stand when the digital asset hit its then all-time high of $ 19 K. The bear market that followed seemed to confirm this for years to come. Then the 2020 bull run began and many of those feelings were put on hold. But now John Paulson has come to market with the same thing.
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Billionaire John Paulson bet against the real estate market over a decade ago. Paulson reportedly made his fortune in 2007 with carefully placed bets against the real estate market. The billionaire had used credit default swaps to bet against the real estate market, which appeared to be in its sub-prime phase. By 2010, Paulson himself had made $ 4.9 billion on his bet. The total amount Paulson made for himself and his clients from short selling the market in 2007 was approximately $ 20 billion, making him one of the greatest fortunes in Wall Street history.
Bitcoin has no intrinsic value
Paulson was on Bloomberg’s Wealth with David Rubenstein to discuss trade and financial markets. Paulson remained optimistic about gold, as he has been for several years, and he believed the time was now. The billionaire had nothing good to say about cryptocurrencies. Cryptos received harsh criticism from Paulson for saying, “I don’t believe in cryptocurrencies.”
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Paulson went on to refer to cryptocurrencies as a “bubble”. Paulson attributed the value of cryptocurrencies to the high demand for them. One could argue that this is how the economy works. Demand always plays the biggest role in appreciation. Paulson also stated that Bitcoin has way too many disadvantages. He added that the digital asset is just too volatile and too short. Hence the short methods
“I would describe cryptocurrencies as a limited supply of nothing. None of the cryptocurrencies has an intrinsic value. ”
Although Paulson was critical of other investments like SPACs, he was toughest on Bitcoin. The billion said that cryptocurrencies “will at some point prove worthless”.
Gold versus BTC
Paulson’s track record following his famous 2007 short film was not remarkable. Although his assets under management grew after the notoriety he gained through this trade, they soon dwindled as investors withdrew their money. In 2019, Paulson went from managing $ 38 billion to just about $ 9 billion in assets under management, at which point he was mostly managing his own money. So Paulson turned his hedge fund into a family office.
BTC has surpassed gold year over year | Source: BTCUSD on TradingView.com
Paulson is bullish about gold, even though Bitcoin has consistently outperformed the asset for the past decade. While gold has consistently produced negative results for its investors, Bitcoin has returned over 200% year-over-year.
Featured image from Bitcoinist, chart from TradingView.com