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

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

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 Report Templates.png

Research

Content Delivery Networks (CDNs) represent low-hanging fruit in a massive market ripe for Web3-driven disruption. The global CDN market was valued at ~$28B in 2024, and is projected to surpass $140B by 2034, (18.75% CAGR) underscoring the immense demand for efficient content delivery.

article-image

Long before BlackRock’s ETF, there was the Winklevoss Bitcoin Trust

article-image

Mainnet goes live with a 16-node federation, promising five-second block times, low fees and Bitcoin-native DeFi

article-image

Sponsored

WalletConnect Certified is not just a recognition program, it’s a movement to improve how users onboard, transact, and engage across the onchain ecosystem

article-image

In crypto investing, quantity has a quality all its own.

article-image

REX and Osprey prep to launch their Solana staking ETF