CNBC’s Jim Cramer on Monday warned investors to stay away from crypto no matter what Bitcoin‘s recent gains and look up instead gold.
“Charts interpreted by Carley Garner suggest you need to ignore crypto cheerleaders now as Bitcoin bounces. And if you’re serious about wanting a real hedge against inflation or economic chaos, she says stick with gold. And I agree.” he said.
Bitcoin continued to gain ground on Monday, reaching as high as $23,155.93 as investors bet the Federal Reserve will slow the pace of rate cuts or halt them altogether.
The price of the digital currency surged to $23,333.83 for the first time since August, according to Coin Metrics on Saturday. That means Bitcoin is up almost 39% since the beginning of this month.
To explain Garner’s analysis, senior commodity market strategist and broker at DeCarley Trading, Cramer examined the daily chart of bitcoin futures and the tech-heavy Nasdaq-100, dating back to March 2021.
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Garner pointed out that the two indices are trading almost in lockstep, which Cramer says suggests it’s a risky asset rather than a currency or stable store of value.
“Imagine business owners trying to transact in shares of Facebook or Google… it’s ridiculous, they’re too volatile. Bitcoin is no different,” he said.
The reason they trade so closely is “counterparty risk,” which represents the likelihood that the other party in an investment or transaction might not fulfill their part of the deal, Cramer said.
“Of course, you can just own bitcoin directly in a decentralized wallet — that protects you from counterparty risk — but if you ever want to use it for anything, risk is back on the table. And as FTX’s customers have learned, it can be devastating,” he said. “On the other hand, Gold, well it’s the opposite.”
Disclaimer: Cramer’s Charitable Trust owns shares of Meta Platforms and Alphabet.
For more analysis, see Cramer’s full statement below.
Jim Cramer’s Guide to Investing
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