John Paulson’s Insight on Cryptocurrency
John Paulson, the billionaire who famously bet against the housing industry with Goldman Sachs in 2006, is back in the news. Paulson is no stranger to the cryptocurrency market, having made a fortune shorting subprime mortgages during the financial crisis.
He has directly invested in 19 companies involved in blockchain technology, data management, or cryptocurrencies through his company, Paulson & Co., and other investment vehicles. He is also an investor in Eximchain, which uses blockchain technology to facilitate cross-border trade finance deals.
Paulson says “they’re all going to zero,” and he’s advising investors to stay away from them because they will never be a viable store of value. But he’s still invested in Bitcoin and Ethereum because “I think those are more likely to work out than others.”
Paulson’s stance on cryptocurrencies, which he called “more speculative than asset classes like gold or stocks,” comes at a time when the value of the largest cryptocurrencies is falling. Since their all-time high at the end of last year, Bitcoin and Ethereum’s prices have fallen by more than half.
John Paulson is known for his early investment in Apple Inc. NASDAQ: AAPL and his bet against subprime mortgages during the financial crisis. He made headlines in October 2015 when he said Bitcoin is worthless and subsequently invested $400 million into the digital currency.
Despite his bullish stance on cryptocurrencies, Paulson has admitted that he is still interested in other coins, including Ripple, Stellar, and Ethereum. The billionaire also said that he believes there will be more largely speculative opportunities for investors to take advantage of in the future. Furthermore, Paulson has been very vocal about his opinion on cryptocurrencies being only a speculative bubble this year.
John Paulson sees the future of cryptocurrencies as a tradeable asset tied to the underlying blockchain technology network rather than a store of value. He believes that the future of digital money lies with public blockchains, though he is unsure which network will become the industry standard.
According to Paulson, the emerging markets of India, China, and South Korea are all vying for dominance in the blockchain space. He also believes that the rise of public blockchains will ultimately lead to more regulatory clarity on cryptocurrencies as governments begin to recognize their importance.
His company, Paulson & Co., where he serves as the chairman and CEO, manages about $33 billion in assets. He was one of the most successful hedge fund managers to emerge from the financial crisis but has struggled as of late and even parted ways with his chief investment officer this summer.