Billionaire John Paulson, who netted $20 billion from the 2008 ‘Big Short' crisis, says cryptocurrencies are a bubble that will “eventually prove to be worthless.”

While Paulson made it big by betting against the U.S. housing market more than a decade ago, the same can’t be said of the crypto market, where the easiest trade seems to be long or going ultra-long.

Things don't seem to be going well with his firm. According to Bloomberg, he turned his hedge fund into a family office last year after assets dropped from their peak of $38 billion in 2011 to about $9 million in 2019, and “he found himself managing mostly his own money.”

Much like Paulson, ‘Big Short’ fame hedge fund manager Michael Burry also described Bitcoin as the “greatest speculative bubble of all time” in March and then three months later, following the big sell-off. He said the crypto-asset would collapse, but since then, BTC has retraced sharply and is back to make its way to $50k.

Crypto slowly destroying all your big short hero’s https://t.co/14OJJlsFQ3

— CMSolflare (@cmsholdings) August 30, 2021

Now, in an interview with Bloomberg, Paulson, 65, dismissed crypto assets, saying, “I wouldn’t recommend anyone invest in cryptocurrencies.”

This makes sense that he is invested in gold and believes the precious metal “does very well in times of inflation,” noting the last time the billion was parabolic was in the1970s when there were two years of double-digit inflation.

He further explains why exactly gold does parabolic, which is basically “a very limited amount of investable gold.”

‘As inflation picks up, people try and get out of fixed income. They try and get out of cash. And the logical place to go is gold, 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.”

And yet, he doesn’t get Bitcoin. He could very well be married to his gold bags.

According to him, when it comes to cryptocurrencies, they are “a limited supply of nothing,” and they have “no intrinsic value.” “So to the extent there's more demand than the limited supply, the price would go up. But to the extent the demand falls, then the price would go down,” he said.

Paulson added that crypto assets “will eventually prove to be worthless” and will go to zero once the exuberance wears off or liquidity dries up.

Given his confidence in cryptos going to zero, it would make sense that Paulson would put a big short on them. But not according to the billionaire because “there's unlimited downside” to them.

“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.”

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