Bitcoin’s price doesn’t depend on anything else apart from people’s expectations of it. This is the opinion of one of the world’s former speculators Jordan Belfort, known as a “Wolf of Wall Street,” a prototype of the popular Martin Scorsese’s self-titled film.
A stockbroker in the past who pleaded guilty for a scheme in 1999, Belfort is currently making a living by being a motivational speaker. Within 2018 he has also spoken against bitcoin several times, and recently he reiterated the crypto-warning motto: “Get out if you don’t want to lose all your money…”
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The Greater Fools Theory
At the end of June, Belfort uploaded a video on YouTube in which he is saying that bitcoin’s foundation is the Greater Fools Theory.
"I know this better than anyone in the world. I'm not proud of that, but I do," said “The Wolf.”
He went on to explain that the price of this virtual currency goes up only because its buyers believe that there will still be ‘greater fools’ who they can merchandise bitcoin to at a higher rate. It is noteworthy that Belfort was the one who once got benefits from the idea at Stratton Oakmont, a brokerage house which he founded in 1989 and which closed down seven years after several shareholders got deceived.
"There's no fundamental value [with bitcoin], it's all based on the next guy and the next guy. Get out if you don't want to lose all of your money because ... 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," elucidated Belfort.
Finally, he concluded:
"I lived this, I was the guy on the other side of it," he says. "I know what's going on and this is the beginning of the end."
Buffett’s Explanation
Interestingly, this is almost the same what world’s top billionaire Warren Buffett previously said about bitcoin. The mogul roasted bitcoin by explaining why it can’t be considered an asset:
"If you buy something like bitcoin or some cryptocurrency, you don't have anything that is producing anything. You're just hoping the next guy pays more. And you only feel you'll find the next guy to pay more if he thinks he's going to find someone that's going to pay more. You aren't investing when you do that, you're speculating,” said Buffett in a Yahoo Finance interview this spring.
Soaring to $50,000
Earlier Belfort spoke against bitcoin and assumed it could skyrocket to $50,000 before finally cracking down. By the way, several crypto-bulls, including Fundstrat’s Tom Lee and BitMEX’s CEO Arthur Hayes, said that by the end of 2018 bitcoin could reach this limit. But not likewise Belfort, they remain optimistic regarding the “Big Daddy.”
As of writing, bitcoin is being traded at $6,710, as per Coinmarketcap.com. In May the coin reached the peak of $9,900 after the vast winter correction, however, after that it’s seen downward fluctuations and since then hasn’t restored its value.
Image Courtesy of Flickr
