In his recent interview with David Rubenstein on Bloomberg Wealth, John Paulson explained why you can’t short crypto. Here’s an excerpt from the interview:
Paulson: When we look for these subprime, the reason why we shorted the subprime in size is because it was asymmetrical. Shorting a bond at par that has a limited duration that trades at a one percent spread of treasury, so you can’t lose more than the spread in the duration. Yet if it defaults, you can make the par amount.
In crypto, there’s unlimited downside. So even though I I could be right over the long term in the short term as the case of Bitcoin, you know, went from 5000 to 45,000. I would be wiped out on the short side, so it’s just too volatile to short.
You can watch the entire interview here:
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