InstaForex

August 31, 2021

John Paulson: Bitcoin is a bubble, and it will definitely devalue

 A few days ago, Bitcoin broke the upward trend line on the four-hour time frame, and from then on, the probability of a new further decline has increased. Now, the quotes of this cryptocurrency have dropped below the Ichimoku cloud, but this is the same uncertain consolidation as a few days ago. Thus, even considering the breakdown of the trend line, the further fall in bitcoin quotes is not obvious at all. From our point of view, the quotes' decline has been in preparation for a long time, so we still expect a fall to the level of $ 29,700 or so. However, the bulls are currently holding the market, so Bitcoin is very reluctant to decline. A descending trend line may already be formed in the near future, which will support the bears, which are very weak at the moment. So far, only one conclusion can be made: the growth has stopped.


Meanwhile, billionaire John Paulson, who once predicted the collapse of the mortgage bond market in 2007, called bitcoin a "bubble" and said that it would devalue in any case.


"I do not recommend investing in cryptocurrencies to anyone. Cryptocurrencies are a limited investment product. There is no value in them except that the issue is limited," Paulson said.


The billionaire also noted that cryptocurrencies have too high volatility, which can lead to losses and bankruptcy of everyone who operates with them. "I could short the cryptocurrencies and be right in the long run, but I will lose everything in the short term because of volatility," He said.


It can be recalled that this is not the first time that well-known investors and billionaires criticize Bitcoin and advise against buying it. Nevertheless, it cannot be denied that Bitcoin is becoming more expensive in the long term, which means it remains a very attractive investment tool. The fundamental background for it remains extremely controversial at this time and is more negative than positive. In China, the repression of miners continues, and in the United States, new tax legislation should be issued anytime soon, which will greatly reduce the attractiveness of Bitcoin as an investment tool for many Americans.


Technically, the main digital asset continues to be in an upward trend on the four-hour time frame, but a consolidation below the upward trend line opens up bearish prospects. Now, Bitcoin needs to securely consolidate below the Ichimoku cloud and the level of $ 47,500. In this case, the bears will seize the initiative, and it will only depend on them whether the cryptocurrency continues to decline From a technical point of view, Bitcoin already has a great chance of falling towards the support level of $ 43,852.