John Paulson, the famous hedge fund manager who made a fortune betting against the U.S. housing market in 2008, is cautioning investors to stay away from cryptocurrencies. Paulson has been quite vocal in his criticism of cryptocurrencies, calling them a skeptical mania and a bubble that is destined to eventually burst.
Paulson, who founded the multi-billion dollar hedge fund Paulson & Co., hasn’t changed his mind about cryptocurrencies lately. Paulson is quoted as saying that “regardless of where they’re trading today, they will eventually prove to be worthless.” He is also wary of the rising influence that cryptocurrencies have had on Wall Street since the market has become more prominent in recent years.
The famous investor argued that the lack of real world assets as a security for cryptocurrencies implies that their value is based on speculation rather than fundamentals. They’re just in the air. In his opinion, the market capitalization in Bitcoin is completely out of touch with reality. The only reason they still have value is because they offer an anonymous means of exchange. But once the hype about them wears off they will become worthless.
Instead, John Paulson has said that Gold is a better investment option in this uncertain and volatile financial environment, as the yellow metal is historically known as a safe haven asset and has always been a store of value. It has been an asset to secure wealth for generations and has always done well in inflationary times when currencies are devalued.
Many investors will be looking to secure their wealth, to retain the value of their money while hedging against inflation and currency devaluation. John Paulson says that Bitcoin and other cryptocurrencies will eventually become worthless, but he believes that Gold is a better long term investment option.
Paulson said that inflation is very high and it’s not widely recognized as governments around the world print more currency to pay off debts, leading to further devaluation of currencies. So his advice to investors is to look for tangible assets like Gold, because hard assets that are traded against a currency will always retain value, while currencies can be inflated.