Cryptocurrencies are often incredibly volatile and can see massive price swings in a short time. This makes them ripe for bear traps. A bear trap is a situation where traders wrongly think a coin is about to reverse a downtrend. These events often result in significant losses. This guide will discuss crypto bear traps, how to identify them, and the risks involved in these situations. Introducing Crypto Bear Traps A bear trap happens when a trader buys assets, expecting the…
Jordan Belfort – the former stockbroker who inspired the film The Wolf of Wall Street – is still bullish on Bitcoin. The trader-turned-novelist argued that investors are nearly guaranteed to make money if they hold Bitcoin for over three years.
HODL, says Belfort
In a conversation with Yahoo Finance on “The Crypto Mile,” Belfort warned Bitcoin investors against taking a “12-month or 24-month horizon”. Rather, he maintained that Bitcoin is best viewed as a long-term inflation hedge, and valuable for its fundamentals.
“With reasonable luck, I think if you take a 24-month horizon you’ll almost certainly make money,” he said. “If you take a three or maybe five-year horizon, I would be shocked if you didn’t make money because the underlying fundamentals of bitcoin are really strong.”
Specifically, the legendary trader claimed that Bitcoin’s limited supply and fiat’s rising inflation will spur its long-term adoption.
Admittedly, Bitcoin has failed to correlate with gold or perform like an inflation hedge over the past year. The market has taken to trading it more like a growth stock than a store of value.
However, Belfort believes this will change with time, chalking up its current trading behavior to its nascency. He noted how there is yet to be any real institutional involvement with Bitcoin, such as from teachers’ pension funds.
The author is big on crypto these days, breaking down its investment opportunities into two categories. Some, like Bitcoin, are strong protocols for their long-term fundamentals.
Others are small-cap projects worthy of small portfolio allocations, which have a chance to shoot to the moon. However, Belfort warns that investors should be “prepared to lose it all” on most such investments.
When Will Bitcoin Rise Again?
The investor predicts that institutional money will flow into the asset class once it will have its own regulations.
“In crypto, you can go out and raise money, but there is no disclosure, and every time there is no disclosure, it always ends badly,” he said.
MicroStrategy CEO Michael Saylor has argued the same case, claiming numerous regulatory obstacles interfere with Bitcoin’s adoption. Among these are its lack of wash trading and leverage requirements, and the prevalence of “wildcat” crypto banks.
Belfort suggested an uninvolvement with blockchain projects to best accomplish their goal as a centralized server. He also suggested that projects with anonymous founders are a big red flag.