Jordan Belfort (an ex-stockbroker) was once known as the “Wolf on Wall Street”. He compared low market capital crypto assets to penny stock because of their extreme price volatility.
Penny stocks are highly speculative shares that cost less than $1.00 and come from unknown or small companies. They can either bring in huge returns or they crash and burn.
The brokering of deals for these stocks was a key reason Belfort rose to prominence in the 1990s.
In an interview with Yahoo Finance, Belfort stated that these types investments have the same predictable cycle which can yield huge returns but can also cause financial ruin for investors who don’t cash out when it is right.
“With these ultra-low cap deals, wow, if you get one of those things at just the right time, you can make massive, huge money.” On the other hand, if you are playing in someone else’s backyard, you will know that they own the house.
He said, “You’re going in there and most times you’re likely to lose.”
Belfort stated that only low-cap crypto assets should be considered for investment if you are prepared to gamble and that it is not a serious investment.
“I don’t believe there’s any research you can do to protect yourself from ultra-low cap [assets] except getting in really, very early. It doesn’t really matter how good or bad the management is, these low caps are so dangerous that it will ride up and eventually end up at the top. People will dump them.
The Wolf of Wall Street noted that he is most interested in Bitcoin ( Bitcoin) and Ether( Ethereum_) as long-term investments because of their strong fundamentals. He said that he is especially interested in BTC because of its potential to be a store-of-value and an inflation hedge once it matures further.
He explained that he believes it is a matter time before enough bitcoin gets into the right hands. As inflation continues to go up and down, it will eventually become mature enough for Bitcoin to start trading more as a store of value than a growth stock.
From crypto hater, to proponent
Belfort, who predicted that BTC’s price would crash to zero in February 2018, described the asset as a “perfect storm of manipulation” because of the lack of liquidity on the market. He also raised concerns about BTC’s use cases and claimed that they were an investment vehicle.
Belfort commented on the change in sentiment regarding Yahoo Finance and said that he was wrong about BTC going zero. Life is all about adapting and growing.
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He stated that while he stands by much of his criticism, the increasing mainstream acceptance of BTC/crypto, and an understanding of the fact that the sector will not be banned, eventually changed his mind.
He stated that his original thesis was one of sovereign risk that the U.S. would simply say “no more” like China. That was what drove him to be so bearish on Bitcoin.