The comparison to the 17th-century tulip craze in the Netherlands has followed bitcoin since its infancy.
Tulip mania is another way to describe a speculative bubble where the natural worth of something is sent upwards by irrational demand.
The tulip craze saw the price of a tulip bulb – thought to produce unique and valuable flowers – move from being valued at the same as a country estate to dropping down to less than the price on an onion.
Mr Belfort, nicknamed the Wolf of Wall Street, has dismissed comparisons between bitcoin and tulip mania.
He said: “The chances, in my mind, of bitcoin becoming anything more than the greatest footnote to the tulip bubble are zero.”
Mr Belfort has long been a staunch critic of bitcoin and other cryptocurrencies, claiming that the “money has been made in bitcoin already.”
Mr Belfort, whose Stratton Oakmont firm made millions using a ‘pump and dump’ operation before he was found guilty of fraud and crimes in connection with stock market manipulation, previously claimed that the cryptocurrency is adopting a similar scheme.
Speaking to the BBC Panorama programme, he said: “It’s a virtual certainty this ends up at zero or close to it. My own opinion.
“But it’s human nature to jump on the bandwagon, it’s what every great bubble is made of and they’re calling this the greatest bubble of all time.”
Bitcoin prices soared last year and saw the prized currency hit an all-time high of $19,535.70 on December 17.
However, since the incredible spike the currency has failed to maintain its trajectory.
January has seen an incredible decline in price for the virtual currency, but this week has marked a 14.35 percent increase in the value bitcoin, according to data from market tracker Coinbase.
According to Coindesk, bitcoin is currently priced at $8753.32 at 10.22 pm on Monday, February 12.
The European Banking Authority, European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority of European Union‘s top banking, securities and pensions watchdogs have all warned cryptocurrency investors they could lose all their money as bitcoin enters a “pricing bubble”.
Bitcoin soared in value in recent months before losing more than half its value, leaving investors who bought in at the highest prices out of pocket. Prices increased to as high as $20,000 in December, before falling to under $7,000 last week.
The watchdogs said in a statement: ”They are highly risky, generally not backed by any tangible assets and unregulated under EU law, and do not, therefore, offer any legal protection to consumers.”
Ryan Derks, an investor with years of experience under his belt who now runs his own federally registered fund specialising in cryptocurrencies, explained why Bitcoin is coming down from such a dramatic high.
He said: “What happened with Bitcoin over the last three to four months is simple physics where there was just so much buying and the price went up so fast, so high, so quickly that it was unsustainable, it had to come down.
“Very much like when you pull a guitar string too high, it doesn’t just go back to neutral, it has to release all of that excess energy. So what we’re seeing right now, in my opinion, is a lot of that excess energy falling out.”
When questioned on its fluctuating prices, Mr Derks explained that Bitcoin functions on “basic supply and demand economics”.
He said: “For me, I can’t say exactly but I can estimate and what I estimate is based on the internal code of what makes Bitcoin work is nothing more than just the basic supply and demand economics.
“So as less coins are available and more people are demanding them the price will increase.”