Jim Cramer Says To Buy Cryptocurrency Only In These Circumstances

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Should you heed the investment expert’s advice?


Key points

  • Jim Cramer is a well-known financial personality and investment expert.
  • He provided advice on investing in cryptocurrency.
  • He believes crypto investing is only appropriate when certain conditions are met.

If you’re trying to decide whether or not to invest in cryptocurrency, you need to consider the unique risks — and potential rewards — of this new asset class. As crypto investing has become increasingly popular among Americans, you’ll want to make sure you’re making informed choices before you continue to put your own money on the line.

Listening to advice from financial professionals can help you decide if crypto investing is right for you. Jim Cramer is a financial guru whose advice you might want to follow, as his investment tips are trusted by millions. Here’s what Cramer has to say about when buying cryptocurrencies might make sense.

Jim Cramer says this is the only time you should invest in cryptocurrencies

Cramer is best known for hosting the show mad money, and he has provided plenty of investment advice on his popular television program. In 2021, he touched on investing in cryptocurrency and outlined the circumstances in which he thinks putting money into virtual coins is an appropriate investment strategy.

Specifically, Cramer says you can put your money into this investment “as long as you recognize the very real possibility that the whole investment case for crypto rests on the biggest fool theory.” If so, he says, “you have I had my blessing to speculate on that.”

This theory suggests that the price of cryptocurrencies will increase even if they are too expensive, because there will always be a “bigger fool”, or a less experienced and less informed person who is willing to pay an inflated price for the assets.

Warning that cryptocurrencies could see their prices rise not because of their underlying merits, but solely because other people are foolish enough to buy them at higher prices, Cramer warns investors against the serious risks of placing their money in this asset. The problem, of course, is that you’ll end up running out of “bigger fools” and might end up with the bag.

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That doesn’t mean Cramer is against crypto investing. In fact, he himself bought virtual currencies, including Ether, to bid on non-fungible tokens. He also said “you can use Bitcoin or Ethereum as an inflation hedge” and invest up to 5% of your portfolio in it.

However, he just wants to make sure investors are aware of the potential risks, including the possibility of their assets losing value as cryptocurrency investments are highly speculative.

Is Cramer right to invest in cryptocurrencies?

Cramer is undoubtedly correct that cryptocurrency prices can be separated from the actual value of coins and can instead be based on people’s perception of them. There has been plenty of evidence to suggest that things like celebrity tweets or social media attention can cause the price of some of these currencies to fluctuate significantly.

But while some coins may not be worth the hype, that doesn’t mean that all cryptocurrency investments will only increase in value if a bigger fool is willing to buy. Anyone looking to buy these assets should ensure they understand how to assess the fundamentals and are guided by sound investment principles when deciding how much money to invest.

By doing the right research and recognizing the risk, you can maximize the chances that your investment will be profitable while reducing the risk of outsized losses that Cramer warned such a speculative investment could bring.

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