The Wolf of Wall Street on bitcoin

Yesterday we included a mention of Jordan Belfort’s thoughts about bitcoin in our market report (http://telegra.ph/Tuesday-Inferno-market-watch-07-03). Belfort, who made his fortune selling and manipulating worthless stocks to unsuspecting investors, knows a thing or two about pump-and-dump schemes.

Belfort has warned bitcoin investors that they are in for more pain. In a video posted on YouTube, Belfort states that this is the ‘beginning of the end’. Belfort is a believer in blockchain technology and even cryptocurrencies, but believes there is too much wrong with bitcoin itself and that the #1 digital currency is not the future. ‘Get out if you don’t want to lose all of your money,’ he warns.

He describes bitcoin as ‘teetering on the edge’ in the video, which was uploaded on 23 June, just as bitcoin plunged to its year low of $5,800. ‘There’s a very good chance it’s going to crack. And when it really cracks, you’re not going to be able to sell on the way down, there will be no liquidity.’ When that happens, he says, all the fraud and scams will come out of the woodwork, including the revelation that a number of major exchange were really inside jobs designed to cover up other problems. ‘I feel bad for you “hodlers” out there,’ he says, ‘but at a certain point in time you’ve got to wake up and smell the coffee… if you think $6,100 is anywhere close to the bottom, you’re f***ing crazy!’

‘When it goes down, this thing isn’t going down $100 at a time. It’ll go from $6,000 to $2,000 like THAT, and you won’t be able to sell it. Take that to the bank.’

Back in February, Belfort predicted prices of over $50,000, before bitcoin finally crashed to nothing. In other words, he appeared to expect one last bubble – the mother of all bubbles – before it implodes forever like one of the pink sheets stocks he sold to unwitting investors. ‘The next stage, you will see it really skyrocket, there will be a short squeeze, it will go even higher and then eventually it will come caving in, it’s almost a guarantee. If you were the most disciplined person and get in and get out there is probably a short window to make some money.’ (See https://www.leaprate.com/cryptocurrency/bitcoin/real-wolf-wall-street-jordan-belfort-predicts-50000-bitcoin/.)

That didn’t come to pass, but Belfort is worth listening to as someone who knows the way financial assets can be manipulated. However, like so many others before him – Warren Buffet included – he appears to make a basic category error in comparing bitcoin to stocks, rather than gold (which also doesn’t generate revenues and doesn’t have ‘intrinsic value’). More accurately, it’s an entirely new asset class that arose at a unique time in human history, that doesn’t compare well to anything else.

To watch Belfort’s YouTube clip, see

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