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CNBC’s Jim Cramer on Monday warned investors to stay away from cryptocurrencies. BitcoinFocusing on the recent gains of, instead of Money.
“A chart interpreted by Carly Garner suggests we need to ignore cryptocurrency cheerleaders at a time when Bitcoin is skyrocketing, and we are serious about real hedges against inflation and economic turmoil. She says you should stick with gold if you want to, and I agree,” he said.
Bitcoin continued its rally on Monday, rising to $23,155.93 as investors bet that the Federal Reserve will ease the pace of rate cuts or halt them altogether.
The digital currency’s price hit $23,333.83 on Saturday for the first time since August, according to Coin Metrics. This shows that Bitcoin is up almost 39% since the beginning of the month.
To illustrate Garner’s analysis, Senior Commodity Market Strategist and Broker at DeCarley Trading, Cramer looked at Bitcoin futures and technology-heavy Nasdaq-100 daily charts going back to March 2021.
Garner points out that the two indices are trading roughly in tandem, suggesting that this is a risk asset rather than a currency or stable value hold, according to Cramer.
“Imagine a business owner trying to trade on Facebook or Google stock … It’s ridiculous. It’s too volatile. Bitcoin is no exception,” he said.
Cramer said the reason they trade so closely is because of “counterparty risk,” which is the possibility that an investment or trading counterparty may not meet the trading objectives.
“Of course, you can own bitcoin directly in a decentralized wallet, which protects you from counterparty risk. As customers have learned, it can be devastating,” he said. “Gold, on the other hand, is the opposite.”
Disclaimer: Cramer’s Charitable Trust owns shares of Meta Platforms and Alphabet.
For a detailed analysis, see Cramer’s full explanation below.
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