Crypto is a bubble that will ‘fall to nothing,’ according to a millionaire investor who predicted the 2008 crisis.

Spotlight:

  • In a wide-ranging interview  legendary investor John Paulson blasted cryptocurrency and advocated gold.
  • He referred to crypto as having a “limited supply of nothing,” referring to the restricted availability of some currencies.
  • According to sources, Paulson has changed his mind about gold as a hedge against increasing inflation.

In a wide-ranging interview, legendary investor John Paulson, whose bet against the housing market in 2008 made him a millionaire, blasted bitcoin and advocated gold.

“I would say that cryptocurrencies are a bubble,” stated Paulson, who last year quit the hedge fund business after netting his firm $20 billion. He explained crypto as a “limited supply of nothing,” pointing to the set amount of some currencies, such as bitcoin’s 21 million token limitations, while others have no such restriction.

“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. I wouldn’t recommend anyone invest in cryptocurrencies,” he asserted.

When asked why he doesn’t just short crypto, Paulson cited the asset class’s high volatility, claiming that a short bet may bankrupt him in the near term, even if he was proved correct in the long run.
Paulson, who has a history of favoring gold purchases, told Bloomberg that he is again optimistic on the precious metal, citing its ability to perform well during periods of rising inflation.

“As inflation picks up … the logical place to go is gold,” claimed Paulson. “But because the amount of money trying to move out of cash and fixed income dwarfs the amount of investable gold, the supply and demand imbalance causes gold to rise.”

Gold as an inflation hedge has been viewed with skepticism by certain scholars. Gold’s inflation-hedging qualities only hold over time horizons of a century, according to a landmark 2012 research by a Duke professor and a former portfolio manager. They discovered that the connection breaks down on shorter timeframes.


Crypto enthusiasts and gold bulls have clashed in the past, with each side touting their favored asset as the best inflation hedge.

According to Paulson, the most common error investors make is searching for get-rich-quick schemes or investing based on a tale rather than facts.

“And then they chase investments that are going up, and ultimately those investments deflate. And then they lose money,” he stated

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