“Wolf of Wall Street” has compared low market cap crypto assets to penny stocks

Former stockbroker Jordan Belfort, known as the “Wolf of Wall Street” has compared low market cap crypto assets to penny stocks due to their extreme price volatility.

Penny stocks denote highly speculative shares priced under $1.00 from small and unknown companies. Normally, they either draw massive returns for investors or crash and burn dramatically.

Belfort’s rise to prominence in the 90s and eventual run-in with the United States Securities and Exchange Commission (SEC), was, in part, due to brokering contracts for these stocks.

During an interview with Yahoo Finance on Saturda, Belfort claimed that these types of investments have the “same predictable cycle” which can produce huge returns but can also burn investors who fail to cash out at the right time.

Belfort also noted that people should only invest in low-cap crypto assets if they are ready to assign a small amount of their portfolio to take bets, and recommended that they should never fall under the category of serious investment.

However, The Wolf of Wall Street also noted that it mainly considers Bitcoin (BTC) and Ether (ETH) in relation to long-term investments due to their solid fundamentals. He said he is particularly interested in BTC for its potential to become a store of value and hedge against inflation once the market matures further in the future.

“I just think it’s a matter of time that where enough of it gets into the right hands, there’s a limited supply, and as inflations do continue to keep going and going and going, at some point in time there’ll be enough maturity with Bitcoin where it starts to trade more like a store of value and less like a growth stock,” he explained. 

Belfort is one of many popular figures in the investment space to do a 180 on crypto over the past couple of years, joining the likes of Shark Tank investors such as Mark Cuban and Kevin O’Leary.

Back in February 2018, Belfort forecast the price of BTC would eventually bang to zero and defined the asset as the “perfect storm for manipulation” due to the thinness of the market at the time. He also questioned BTCs supposed use case payments as opposite to just being an investment vehicle, and recommended that it would be regulated out of existence.

Remarking on his change in sentiment with Yahoo Finance, Belfort accepted he was “wrong” about BTC going to zero and that life is about “constantly adapting and growing.”

He however said that he still stands by most of his criticism, the growing conventional adoption of BTC and crypto, along with an understanding that the sector won’t be banned outright, ultimately changed his mind.