If you’re weighing whether or not to invest in cryptocurrency, you should consider the distinct dangers — and potential benefits — of this newer asset class. While crypto investing is becoming more popular in the United States, you’ll want to make sure your decisions are well-informed before putting your own money on the line.
It’s important to understand the differences between cryptocurrencies before you invest. Listening to financial advisers’ opinions on whether crypto investing is suitable for you might help you decide. Jim Cramer, a renowned financial expert, has suggested that millions of people follow his investment advice since it is trusted by many. Here’s what Cramer has to say about when it’s appropriate to purchase cryptocurrencies.
Cramer is most recognized for his work on the television program Mad Money, during which he has given a lot of investing advice. In 2021, Cramer addressed cryptocurrency investing and outlined the circumstances under which he thinks purchasing virtual coins is an appropriate investment technique.
Cramer added: “Put simply, if you believe that the entire investment case for crypto relies on the greater fool theory, then go ahead and invest in it.” If that’s the case, he says, “you may gamble on it.”
This idea states that even if cryptocurrencies are overpriced, their prices will continue to rise because there will always be a “greater fool,” or someone less experienced, less informed who is ready to pay an exorbitant price for the assets.
Cramer is warning investors about the great dangers of investing in cryptocurrencies, stating that they may experience rising values not as a result of their underlying value, but rather only because other people are stupid enough to buy them at higher prices. Of course, the problem is that eventually you’ll run out of “greater fools” and be left holding the bag.
This does not imply that Cramer is against crypto investing. In fact, he’s invested in some virtual currencies, including Ether to bid on nonfungible tokens. He’s also declared “Bitcoin or Ethereum may be used as a hedge against inflation and may be invested up to 5% of your portfolio.”
However, he just wants to make investors aware of the potential dangers, including the risk that their assets might lose value owing to cryptocurrency’s high degree of speculation.