Why Investors Should Ignore Cryptocurrency and Stick to Gold
CNBC’s Jim Cramer on Monday warned investors to stay away from crypto despite bitcoinrecent achievements and instead look at gold.
“The charts, as interpreted by Carly Garner, suggest that you need to ignore the crypto cheerleaders now that bitcoin is bouncing. And if you seriously want some real protection against inflation or economic chaos, she says you should stick with gold. And I agree,” he said.
Bitcoin continued to rise on Monday, hitting $23,155.93 as investors bet that the Federal Reserve would ease the pace of interest rate cuts or stop them altogether.
The price of the digital currency rose to $23,333.83 on Saturday for the first time since August, according to Coin Metrics. This means that bitcoin is up almost 39% since the beginning of this month.
To explain the analysis of Garner, senior commodities strategist and broker at DeCarley Trading, Cramer studied the March 2021 daily chart of bitcoin futures and the high-tech Nasdaq-100 index.
Garner noted that the two indices are trading almost in sync, suggesting it is a risky asset and not a currency or stable store of value, according to Cramer.
“Imagine business owners trying to transact with Facebook or Google shares… that’s ridiculous, they’re too volatile. Bitcoin is no different,” he said.
The reason they trade so closely, Cramer said, is because of “counterparty risk,” which is the possibility that the other party in an investment or trade may not fulfill their end of the trade.
“Sure, you can just hold bitcoins directly in a decentralized wallet – that will protect you from counterparty risk – but if you ever want to use it for anything, the risk is back on the table. And, as FTX customers have learned, it can be devastating,” he said. “Gold, on the other hand, well, it’s the other way around.”
Disclaimer: Cramer’s Charitable Trust holds shares in Meta Platforms and Alphabet.
For a more detailed analysis, see Cramer’s full explanation below.