Jim Cramer, host of the famous CNBC show Mad Money, has once again changed his mind about cryptocurrencies. Now, Cramer has claimed that the entire market will collapse because of the Federal Reserve’s (Fed) interest rate policy. According to Cramer, the new program to increase liquidity withdrawal from markets is a risk for cryptocurrencies. In his view, this program “will wipe out all speculative assets”, among which Cramer includes Bitcoin (BTC). “Look, Fed chief Jay Powell told us we need to stop doing stupid things with our money. What matters is that we have to get through this (interest increase) intact. Don’t be an idiot. Do not buy overvalued stocks or cryptocurrencies,” Cramer said. In addition to committing to further interest rate hikes to control inflation, the Fed has increased the intensity of its balance sheet reduction. As explained in its official schedule, the Fed has increased the amount of asset sales in the markets from $47 billion to $95 billion, as of Thursday (1). These asset sales are aimed at reducing the amount of money in the economy and therefore trying to control inflation. However, many analysts fear that this policy will cause the price of riskier assets to fall around the world and also in the United States.
“Bitcoin is not a protective asset,” says Cramer
Cramer believes that with this policy, the Fed has the ability to eliminate all projects that could be described as “gambles.” After all, with less money in the market, investors tend to prefer not to take risks when investing. In this sense, riskier tech companies, especially those that do not make a profit (such as Uber and Netflix) can suffer major corrections. Cryptocurrencies would also enter this group, given their strong volatility and very high risks. However, the institution could also harm more solid companies in the process, added the American, as investors tend to see sectors as a whole. Therefore, even the most solid companies must suffer from the correction. The same happens with BTC, which, although it is the most solid among cryptocurrencies, suffers from the contagion of the market. Additionally, the cryptocurrency has a strong correlation with the tech stock index, the Nasdaq 100 Earlier this week, Bitfury CEO Brian Brooks also touched on the Fed and how its approach to fighting inflation hurts BTC “We talked about the idea that Bitcoin is an inflation hedge. The more the market expects tough policy from the Fed, the more people think that the central bank will maintain an aggressive stance, and that tends to hurt Bitcoin,” he said.
your previous thoughts
It is safe to say that Cramer is among those individuals who frequently change their views on the cryptocurrency market, primarily based on pricing. That is, if prices rise, the presenter becomes optimistic; if there is a correction, Cramer speaks out against the market. For example, in 2018, when the price of BTC dropped below $4,000, Cramer described it as an “outlaw currency”. However, when BTC peaked at almost 70,000, the presenter said that he would receive his salary in cryptocurrency. Later, when China once again banned cryptocurrency trading, Cramer again changed his mind, stating that he sold almost all of his BTC. The presenter called the market “a fool’s game” and that his investment was just a “gamble”. In June of that year, he changed his mind again, saying that BTC and Ether (ETH) “seem to be the most legit” on the market. Like Cramer, he recommended that investors only interact with these two and never borrow to enter the market. Read also: Central Bank of Singapore says cryptocurrencies will never die Read also: The Sandbox invests BRL 8.9 million in startup Index Game Read also: ConsenSys will launch ‘green’ NFTs on Ethereum in celebration of The Merge
