Jim Cramer, popular CNBC host, warned investors to stay away from cryptocurrency despite Bitcoin’s recent gains and instead look to gold.
The charts, as interpreted by Carly Garner, suggest that you need to ignore bullish cryptocurrency leaders now that Bitcoin is on the rise. And if you seriously want a real hedge against inflation or economic chaos, she says you should hold on to gold. I agree,” He said for him.
Bitcoin extended its rally on Monday (23), reaching $23,155.93, as investors believe the Federal Reserve will ease the pace of interest rate cuts or stop them altogether.
The price of the digital currency rose to $23,333.83 on Saturday (21) for the first time since August, according to Coin Metrics. This represents an increase of nearly 39% since the beginning of this month.
To explain the analysis by Garner, a chief commodity market strategist and broker at DeCarley Trading, Cramer looked at the daily chart of Bitcoin futures and the Nasdaq 100, which goes back to March 2021.
Garner noted that the two indices trade roughly together, indicating that this is a risky asset rather than a currency or stable store of value, according to Kramer.
“Imagine entrepreneurs trying to trade shares of Facebook or Google… It’s ridiculous, they’re so volatile. Bitcoin is no different,” he said.
The reason they trade so closely, Kramer said, is because of “counterparty credit risk,” which is the possibility that the other party to an investment or transaction may not perform their part in the transaction.
“Of course, you can just own Bitcoin in a decentralized wallet, which protects you from counterparty credit risk, but if you want to use it for anything, the risk is back on the table. And as FTX clients know, that can be devastating.”
In recent months, several investor lawsuits have been filed against Binance, FTX, and Genesis over withdrawal issues. Problems range from liquidity crunches to misappropriation of customer funds, but it seems most will never get their money back in full.
In addition to the uncertainty and legal process required to obtain compensation for damages, the whole thing takes a lot of time. For example, the 24,000 customers of Mt. Gox, an exchange that collapsed in 2014, is still waiting for a refund, which has been continually delayed for years.
However, Cramer is known in both the traditional financial and cryptocurrency communities for his inaccurate predictions. This inaccuracy happens so often that a profile, called Inverse Cramer, has been created to invest the exact opposite of what the presenter suggests.