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Seems like cryptocurrency has been seen as a worthless fad ever since Bitcoin first emerged from the bowels of an anonymous engineer’s computer platform in 2009.
While some of the criticism has come from the general public, who may not have a clear idea of what cryptocurrencies are, how they work, or why they have any value, some very financial minds. savvy people have also questioned the growing importance of crypto.
One such critic is billionaire investor John Paulson, who in recent comments called digital currencies a bubble that “will end up being worthless.”
The volatility seen in the crypto markets over the past few days – Bitcoin fell 17% at one point on Tuesday, the same day El Salvador started accepting it as legal tender – doesn’t provide much defense against it. Paulson’s reviews.
Let’s see what his deal is with crypto and whether you should cash in or buy the drop.
Paulson’s reasons for being bearish in crypto
Paulson has experience in exposing at least one notable financial scam. As a co-founder of The Carlyle Group, he was one of the hedge fund heavyweights who saw corruption at the heart of the subprime mortgage industry and then bypassed the US real estate market before it it only collapsed in 2007, earning it $ 4 billion.
And he seems to be just as skeptical about crypto.
“I would not recommend anyone to invest in cryptocurrencies,” Paulson said during an appearance on Bloomberg Wealth with David Rubenstein Bloomberg TV.
“I would describe them as a limited supply of nothing. So to the extent that there is more demand than the limited supply, the price would increase. But as the demand goes down, the price goes down. There is no intrinsic value in any of the cryptocurrencies except that there is a limited amount.
It’s also worth considering what value an asset can actually have if its price can fluctuate so sharply from minute to minute, as Bitcoin did on Tuesday. According to the analysis by CoinMarketCap, the entire crypto market lost around $ 300 billion between Tuesday morning and Wednesday afternoon.
This kind of volatility is reminiscent of the dot-com bubble of the early 2000s and the real estate crash that Paulson already took advantage of. Both were the result of empty assets attracting billions of ignorant money.
Paulson went on to say that cryptocurrencies could possibly be worthless.
“Once the exuberance wears off or the cash runs out, it will go to zero. I would not recommend anyone to invest in cryptocurrencies, ”he said.
The other side of Bitcoin
As Bitcoin values fell on Tuesday, at least one investor bought at the bottom of the wave: the country of El Salvador.
Bitcoin’s plunge on Tuesday came at a tricky time for the Central American country as it had just launched its plan to accept cryptocurrency as legal tender. Despite the uproar, El Salvador bought an additional 150 Bitcoins as prices fell on Tuesday morning.
President of El Salvador Nayib Bukele clearly sees more value in Bitcoin than Paulson. But his decision … anybody decision – buying a volatile asset when its value is plummeting is about as risky as investing.
Bukele tweeted that he bought his 150 new pieces at 11:15 a.m. Tuesday morning. (Twitter posts are automatically time-stamped using local time, which would make it 11:15 CST or 1:15 EST.) $ 51,000 each.
The problem is, Bitcoin ate it after procurement. As of 4:15 p.m. Tuesday, it was selling for $ 46,927. It fell to just over $ 44,000 by early Thursday morning, before climbing back up to over $ 46,500 by 4 p.m.
That’s the problem with buying the dip. You never really know if it really is a dip – or a trough, or an infernal pit the size of a Mariana Trench – until it drains enough. time for the recoil to take effect.
Enter the game
Whether you see crypto as the currency of tomorrow or a get-rich-quick scheme with the days running out, there are plenty of ways to put your money to work for you.
For risk-averse investors, focusing on assets that produce hard cash is a good place to start.
For example, there are some popular investment services that help secure a stable rental income stream by investing in high-end real estate properties, from commercial developments in Los Angeles to residential buildings in New York.
You’ll get exposure to high-end properties that real estate moguls typically have access to, and you’ll receive regular payouts in the form of quarterly dividend distributions.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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