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Subprime Mortgage Billionaire John Paulson Discourages Crypto Investing

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John Paulson raked in billions by taking advantage of the U.S. 2008 real estate debacle and now has shared that he sees cryptocurrency as a shaky investment he’s steering clear of, Bloomberg reported Monday (Aug. 30).

Paulson argued the “limited supply of nothing” will equal zero, according to the report. He said he “would say that cryptocurrencies are a bubble.”

“So, to the extent there’s more demand than the limited supply, the price would go up,” he said, per the report. “But to the extent the demand falls, then the price would go down. There’s no intrinsic value to any of the cryptocurrencies except that there’s a limited amount.”

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Paulson’s company brought in earnings topping $20 billion by capitalizing on the real estate bubble, which ended up being among the worst financial crises of all time, the report stated. He spun his magic by shorting — assuming that subprime mortgage bonds would plummet.

“I wouldn’t recommend anyone invest in cryptocurrencies,” Paulson said, per the report.

See also: Subprime Auto Loan Delinquencies May Point To Bumpy Road For Lender

“In crypto, there’s unlimited downside,” he added, according to Bloomberg. “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.”

“Cryptocurrencies, regardless of where they’re trading today, will eventually prove to be worthless,” he added. “Once the exuberance wears off, or liquidity dries up, they will go to zero.”

Paulson’s stance isn’t expected to have a lot of fans since digital assets largely rose up and beyond forecasts. Paulson also flipped his hedge fund company into “a family office” in 2020 following the seesaw of asset value to a low of $9 billion in 2019 from a height of $38 billion in 2011, the report stated.



 About: In spite of their price volatility and regulatory uncertainty, new PYMNTS research shows that 58 percent of multinational firms are already using at least one form of cryptocurrency — especially when moving funds across borders. The new Cryptocurrency, Blockchain and Global Business survey, a PYMNTS and Circle collaboration, polls 500 executives looks at the potential and the pitfalls facing crypto as it moves into the financial mainstream.