Jordan Belfort, a former Wall Street trader, turned novelist, is the author of The Wolf of Wall Street, which Martin Scorsese converted into a movie in 2013.
Former stockbroker Jordan Belfort, whose life inspired the blockbuster film The Wolf of Wall Street, has cautioned against investing in bitcoin with a “12-month or 24-month horizon”.
While speaking at an interview recently, he said:
“With decent luck, I think if you take a 24-month horizon, I think you’ll almost surely earn money. The core fundamentals of bitcoin are robust, so if you look out three to five years, I’d be surprised if you didn’t earn money. Because of its scarcity and increasing inflation, bitcoin will eventually start to trade more like a store of value than a growth stock.”
Jordan Belfort: “Most of the time, you will lose.”
Belfort cautioned, however, “that most of the time you will lose and be prepared to lose it all” in these endeavors.
Bitcoin behaves like a tech stock and moves in lockstep with the Nasdaq.
Since bitcoin is still in its infancy, Belfort believes that this correlation makes sense:
“It doesn’t surprise me one bit that it is doing that and it would be more of a surprise if bitcoin was already trading as an inflation hedge because it is still very nascent”
“There is no true institutional ownership in bitcoin, For example, a teachers pension fund does not own bitcoin for a ten-year hedging.”
When opposed to the murky activities in crypto markets, “where individuals are getting murdered,” he said, the fraudulent behavior in traditional markets is piecemeal. It will require regulation for institutional money to flow into the area.
“In cryptocurrency, you can raise money through public offerings, but there is no disclosure, and bad things always happen wherever there is no disclosure.”
The management team behind crypto protocols should be closely scrutinized, he advises investors, adding that:
“If you don’t know who the owners of a protocol are, then that is a significant problem for me.”
Another thing to consider is the project’s utility. The definitive test for a blockchain project is “if the idea works better from a centralized server, I would probably not become involved,” which he claims is the best way to judge a blockchain project.
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