John Paulson thinks cryptocurrencies will prove worthless.
John Paulson specializes in meltdown-proof portfolios which makes a timely topic during these turbulent times.
John Paulson’s call to fame and fortune came during the last 2008 financial crisis where his bearish subprime mortgages bets ahead of the housing crash and recession made him $4 billion in profits.
Hollywood made a film about him called the Big Short.
“John Paulson specializes in meltdown-proof portfolios which makes a timely topic during these turbulent times”
WEALTH TRAINING COMPANY
A few months ago, John Paulson was back on the stage with his bearish growls, where he called digital currencies a bubble that will “eventually prove to be worthless.” His comment raised eyebrows in the cryptocurrency community.
But in the same breath, he said that he would not even short it because of its volatility, a wise move considering the recent crypto pop.
With the Federal Reserve, the world’s central bank by default, announcing a historic move to taper will John Paulson thinks cryptocurrencies will prove worthless materialize in yet another great short
Michael Bury is another bear with sharp teeth and claws who has taken to the stage and said, “I believe that cryptocurrencies are in a bubble and that most in it do not understand it well” said Bury.
So at least Michael Bury understands the utility of cryptocurrencies and the wide application of blockchain technologies.
“I believe that cryptocurrencies are in a bubble and that most in it do not understand it well”
But the central banks have gone overkill on creating unprecedented amounts of cash to fend off a depression. All that liquidity sloshing around the financial markets has created the bubble of everything. Cryptos, including those with utility, could be in a bubble, like most assets. JPMorgan sounds alarmed over ‘frothy’ crypto markets after August boom.
“there are cryptocurrencies with utility and investors who study the market and buy cryptocurrencies that facilitate the digitalization of everything should do well in the long run.” – Wealth Training Company
Will taper tantrums prove John Paulson thinks cryptocurrencies will prove a worthless call to be true?
If the Fed reduces its asset purchases by 15B US dollars a month that will take liquidity out of the market, treasury yields will rise, and risk-off sentiment could follow. Tighter liquidity conditions will hit the frothy crypto market.
We believe there could be a sharp sell-off, bearing in mind some cryptocurrencies are up over 800% in a year. The play dumb get rich strategy will be over if the Fed tightens, which will force investors to get back to fundamentals.
So, there are cryptocurrencies with utility and investors who study the market and buy cryptocurrencies that facilitate the digitalization of everything should do well in the long run.
We disagree with John Paulson thinks cryptocurrencies will prove a worthless call
However, in the short-term John Paulson the great bear with sharp claws could see huge profits shorting the crypto space.
In a bubble, everything gets sold, even the world’s oldest safe-haven asset, gold.
Margin calls, higher borrowing creates a wave of force sellers, and that is when the lucky few sitting on a mountain of cash snap up bargain assets, including cryptos with functional value.
Big players invest in a depression, then harvest profits in a boom time. But Joe public does the reverse. They don’t teach you this at school.