CNBC’s Jim Cramer Halts Bitcoin Purchases; Lays Out Conditions for Market Re-Entry
Financial analyst Jim Cramer believes Bitcoin is still overpriced, despite dropping 20 percent in three days. He makes his observation known as Bitcoin leaves investors on the edge of their seats.
There has been much talk concerning Bitcoin and its performance of late, with critics and proponents of the asset debating on the leading cryptocurrency’s volatility.
Former hedge fund manager and prominent financial analyst Jim Cramer weighed in on the issue following Bitcoin’s drop.
Bitcoin to $20,000
Earlier this week, Cramer, who hosts CNBC’s Mad Money segment, appeared in an interview on TheStreet, where he revealed that Bitcoin is still an “erratic” stock. The TV personality has grown to be one of Bitcoin’s fiercest proponents in the media. While he explained that he still had a lot of faith in the leading cryptocurrency, he admitted that there were warning signs for it nonetheless.
Summarizing his thoughts, Cramer explained that he wouldn’t be buying any more Bitcoins until the asset drops back below the $20,000 mark. He said:
“My goal was to get my cash out so I don’t have to think about it. If it goes back under $20,000, I’m a buyer again. But I got my cost out, and I’m playing with the house’s money. This is no different than an entirely erratic stock.”
Cramer’s comment comes following a hefty drop in Bitcoin’s price over the weekend. The leading crypto asset had been riding a historic high, jumping from less than $20,000 to $42,000 in less than a month. However, it ran out of momentum over the weekend and crashed to nearly $30,000 yesterday.
Bitcoin’s performance over the past few days is yet another reminder that investors will need to be careful with how they approach it. Many have shared Cramer’s sentiment and are now looking to see how low it can go before buying the dip.
More Corrections Incoming?
As for how low Bitcoin can go, opinions vary. Cramer believed that a drop to $20,000 is possible, but some even paint a worse picture. Speaking with industry news sources, Alex Mashinsky, the chief executive of crypto wallet service Celsius, explained that this recent price glut is only a sign of a larger correction coming.
As Mashinsky said, bears will eventually accumulate enough pressure on Bitcoin to drag its price down even further. All in all, the wallet developer sees Bitcoin dropping to about $16,000 this year.
Some market fundamentals are also showing weak signs. U.K.-based crypto fund manager CoinShares explained in its recent Digital Asset Fund Flows report that the first trading week of 2021 saw just $29 million in institutional crypto investments – that’s a 97 percent drop from the $1.09 billion invested in the week before Christmas alone. While the company pointed to profit-taking from institutions, it could also be a warning sign that institutions are pumping the brakes on Bitcoin for now.
Yesterday, Scott Minerd, the Chief Investment Officer (CIO) of Wall Street investment giant Guggenheim Partners, tweeted that Bitcoin had been on an unsustainable rise and that it was time to “take some money off the table.”
The investment firm recently filed to allow its $5.3 billion Macro Opportunities fund to make Bitcoin plays, but that doesn’t kick in until later this month. If it gets cold feet before then, the ripple effect could be devastating.