Billionaire John Paulson Calls Crypto ‘A Limited Supply of Nothing’

Founder of Paulson & Co. prefers gold as a hedge against inflation.

share

key takeaways

  • Paulson said unlike his “asymmetrical” bet against the US subprime mortgage lending market in 2007, crypto has “unlimited downside”
  • Paulson is in part known for using credit default swaps to bet against the US subprime mortgage lending market in 2007.

While some billionaires are bullish on crypto, John Paulson is not one of them.

The founder of New York-based investment management firm Paulson & Co. called cryptocurrencies a bubble during an interview on Bloomberg TV, also describing them as “a limited supply of nothing.”

“Cryptocurrencies, regardless of where they’re trading today, will eventually prove to be worthless,” he explained in an episode of Bloomberg Wealth with David Rubenstein. “Once the exuberance wears off, or liquidity dries up, they will go to zero. I wouldn’t recommend anyone invest in cryptocurrencies.”

An executive at Paulson & Co. did not immediately return Blockworks’ request for comment. 

Paulson is in part known for using credit default swaps to bet against the US subprime mortgage lending market in 2007. Funds he ran were up $15 billion that year, and he collected an estimated $4 billion for himself, the Wall Street Journal previously reported.

The hedge fund billionaire said during the interview that his firm shorted subprime because it was asymmetrical – the upside far outweighed the downside – but noted that crypto is too volatile to short. 

“In crypto, there’s unlimited downside,” he said. “So even though I could be right over the long term, in the short term, I’d be wiped out.”

Paulson said he prefers investing gold in times of inflation, noting that he expects inflation levels to exceed expectations. Federal Reserve Chairman Jerome Powell said during his virtual Jackson Hole policy forum address on Friday that today’s 4% inflation will not be lasting, also claiming that current wage increases are unlikely to impact inflation significantly. 

Paulson’s comments come as other billionaire hedge fund managers have vocalized the opportunity they see in crypto investments.

Paul Tudor Jones, founder and CIO of Tudor Investment Corporation, said in June that bitcoin was a good portfolio diversifier to combat inflation, noting that he favors allocating 5% of a portfolio to the cryptocurrency.

Steve Cohen, CEO of hedge fund manager Point72, said during a webinar that he has been looking into crypto and is now “fully converted.” The billionaire noted at the time that he cares more about how disruptive blockchain technology can be than bitcoin itself.

A survey published by Intertrust Group found that about one in six hedge fund managers expect to invest more than 10% of their investment holdings in cryptocurrencies in five years.

Want more investor-focused content on digital assets? Join us September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. Buy it now.

Tags

Upcoming Events

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

Bitcoin needs a price, but its magic runs deeper

article-image

Circle had a pretty successful first day of trading, but what’s next for the stablecoin issuer?

article-image

Solana’s USDC caught a boost after being paired with the TRUMP memecoin

article-image

The stablecoin issuer’s successful first day of trading is likely to spur more crypto IPOs, industry watchers say

article-image

Job openings rallied and continuing claims stalled ahead of May’s employment report

article-image

A group of Twitch streamers battle for bitcoin. Will their chats help them?