Mad Money's Jim Cramer Invests in Crypto Because 'There Could Be Millions of Greater Fools Out There'
The host of Mad Money, Jim Cramer, has some advice for crypto investors. “As long as you recognize the very real possibility that the whole investment case for crypto rests on the greater fool theory, you’ve got my blessing to speculate on it,” he said. Cramer added that he is holding ether because he believes “there could be millions of greater fools out there.”
Jim Cramer’s Crypto Investing Advice
The host of the Mad Money show on CNBC, Jim Cramer, talked about crypto investing Thursday. The former hedge fund manager who co-founded Thestreet.com, a financial news and literacy website, said:
As long as you recognize the very real possibility that the whole investment case for crypto rests on the greater fool theory, you’ve got my blessing to speculate on it.
The greater fool theory states that the price of an asset is determined by whether you can sell it for a higher price at a later point in time. The theory refers to the idea that you can make money purchasing an asset because there is someone out there who eventually is willing to buy it from you at a higher price.
Cramer added, “I know a lot of people say ridiculous things about crypto, and I’ve caught a lot of flack for acknowledging that.” However, he emphasized:
At the end of the day, I’ve said repeatedly that you can use bitcoin or ethereum as a hedge against inflation, up to 5% of your savings, as a replacement for gold.
In August, the Mad Money host recommended putting up to 5% of portfolios in cryptocurrencies, stating that he is a believer in crypto. He said in March that gold let him down.
Cramer further shared: “I didn’t buy bitcoin or ethereum as inflation insurance. In all honesty, I was gambling. I was simply gambling on crowd psychology, though, and I have no idea whatsoever why these things went up, except that there are a lot of overenthusiastic people who want to buy high and sell higher.” He elaborated:
I’m holding onto my ethereum because I believe there could be millions of greater fools out there. I think that’s a decent bet.
He continued: “I don’t have any particular attachment to ethereum and eventually I’ll ring the register on the rest of my position when I think it’s done going higher.”
The price of ether hit an all-time high on Friday. At the time of writing, ETH stands at $4,274. It was down 3.5% in the past 24 hours but up 7% in the past seven days and almost 50% in the last 30 days.
In June, Cramer revealed that he sold almost all of his bitcoin after the Chinese government reiterated its crypto crackdown. In the same month, he said he put money in ETH, noting: “I like ethereum because people actually use it much more to be able to buy things.” In September, the Mad Money host begged crypto investors to take profit if they had any crypto gains due to concerns over Evergrande and Tether.
What do you think about Jim Cramer’s comments? Let us know in the comments section below.
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