Key points to remember
- The cryptocurrency space has “no real value” and could suffer further losses, Jim Cramer suggested on CNBC’s Squawk Box on Tuesday.
- The former hedge fund manager pointed to the recent wave of crypto firms suffering from liquidity issues as he slammed the space.
- Cramer’s comments come months after he said investors could “easily” earn 35-40% returns by investing in Ethereum. It also previously announced that it had purchased the asset.
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Cramer memorably said in April that he was “a fan” of Ethereum and suggested that investors could “easily” cash in 40% return on the asset. It was trading at around $3,000 at the time.
Jim Cramer changes his tone on crypto
Now that crypto prices have fallen, Jim Cramer has indicated that he’s ultimately not a big fan of the emerging asset class.
“Crypto really seems to be imploding. It’s gone from $3 trillion to $1 trillion. Why should it stop at $1 trillion? There’s no real value there” , declares @jimcramer on #crypto. “What a horrible asset. NFTs sold to you. Invented.” pic.twitter.com/09e5ST8q0N
— Squawk Box (@SquawkCNBC) July 5, 2022
speaking on CNBC‘s Squawk Box on Tuesday, the former hedge fund manager discussed the multi-month downtrend spreading across global markets, noting that he was most interested in the current state of the crypto market. -change. “Crypto really seems to be imploding. When it goes from $3 trillion to $1 trillion, why should it stop at $1 trillion? There is no real value there,” he said of the sharp drop in global crypto market capitalization over the past eight months, before commenting on the growing number of companies. facing turbulence due to the recent market crash. “How many businesses can Sam Bankman-Fried save?” he added.
Last week, the US arm of Bankman-Fried’s FTX exchange reached an agreement with BlockFi to acquire the company for up to $240 million amid the lender’s insolvency troubles. Alameda Research, the commercial firm founded by Bankman-Fried, also stepped in to bail out Voyager Digital last month as the company announced it was suffering from its own liquidity crunch. The fallout from the recent Terra implosion and the explosion of Three Arrows Capital has wreaked havoc on the industry and partly contributed to the recent market drop. After a series of companies revealed their problems, Bankman-Fried said Forbes that he thinks many more exchanges could be “secretly insolvent”.
Cramer’s previous comments on Ethereum
Cramer’s latest comments will likely surprise some, given his previous thoughts on crypto. In April he declared on Squawk Box that he thought Ethereum was “great” and that he was “a believer”. He then said that investors “could easily get [returns of] 35 or 40%”. ETH has since fallen from a price of $2,970 to $1,100, meaning anyone who was investing at the time he made these comments would have racked up losses of over 60%.
Cramer also said in June 2021 that he liked Ethereum over Bitcoin because “people use [ETH] to be able to buy things,” revealing that he had purchased ETH and would continue to add to his holdings. It was trading just over $2,000 at the time. Before diving into Ethereum, he recommended investors to allocate 5% of their Bitcoin portfolios because he led the crypto bullish race at the beginning of 2021.
Along with the rest of the cryptocurrency market and other risky assets, ETH has had a rocky 2022, down around 70% year-to-date. Notably, major tech stocks like Meta, Netflix and PayPal all posted losses of more than 50% amid Federal Reserve interest rate hikes and growing fears of a global recession.
While Cramer pointed to recent explosions of crypto companies and the NFT market to explain why space has no value, he did not mention any recent innovations like DeFi trading, stablecoins, layer 2 rollups or the value of NFT art. himself in his comments.
During market downturns, crypto followers have been known to call each other to “HODL” and “buy the dip,” mantras that advocate holding onto and accumulating more coins whenever the charts turn red. Despite his earlier comments, it looks like Cramer isn’t one of them anymore.
Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.