Since the market capitalization of cryptocurrencies has shrunk, they have been compared to penny stocks by Jordan Belfort, a former stockbroker also known as the “Wolf of Wall Street,” due to their extreme price volatility.
Penny stocks are shares of small, unidentified companies that trade for less than $1 due to their high speculative value. Usually, they either have spectacularly successful outcomes for their investors or disastrous failures. Brokering contracts for such stocks contributed to Belfort’s meteoric rise in the 1990s, as well as to his subsequent issues with the U.S. Securities and Exchange Commission (SEC).
Low market capitalization crypto assets are like penny stocks, according to Jordan Belfort.
In an interview with Yahoo Finance published on August 27th, Belfort speculated that investors who fail to cash out their gains at the peak of the market cycle may get burned.
He pointed out that investors have the possibility of making a lot of money thanks to the incredibly low cap contracts, but warned that they risk losing everything if they do so. There are more opportunities for failure, he added.
Belfort also advised investors to allocate only a small amount of their portfolio to risk by purchasing low-cap crypto assets. His advice was that they should avoid anything that would be considered a major financial commitment. He revealed that very little study has been conducted over whether or not, other than entering very early, someone may safeguard themselves from assets with relatively low capitalization.
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He clarified that it doesn’t matter how excellent or horrible the company’s management is; what matters is that if it’s a low cap institution, its share price will eventually soar to an unsustainable level, at which point investors will dump it. Recently, Belfort has worked with other notable investors including Kevin O’Leary and Mark Cuban, establishing himself as one of the most well-known characters in the investment industry.
He predicted that the price of Bitcoin would fall to zero in February of 2018. He voiced skepticism over Bitcoin’s purported payment uses beyond those of a mere investment vehicle and predicted that regulatory pressure would eventually put an end to the cryptocurrency.