Jim Cramer Says You Shouldn’t Borrow Money To Buy Bitcoin, Here’s Why

The issue of borrowing money to invest in cryptocurrencies such as Bitcoin has been widespread in the crypto space. Most of the time, there have been many news stories about people who borrowed money to buy these cryptocurrencies and ended up in massive debt that they couldn’t repay immediately due to the fact that the price of digital assets has crashed, as they are used to. .

Jim Cramer, a prominent figure in the investment scene, has come out to warn against this practice. The Mad Money host had a range of advice for cryptocurrency investors in a new CNBC where he talks about the good, the bad and the ugly of cryptocurrencies.

Don’t Buy Bitcoin With Borrowed Money

in a new video of CNBC’s Make It, Jim Cramer directs his advice to young people who have found themselves investing in the space. He explains that there is merit in investing in cryptocurrencies, some of which he owns himself. The gains made by some in the market have made others want to enter and make a fortune in the space. But too often, these people can get sucked in and end up making terrible decisions.

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Cramer warns of the dangers of borrowing money to buy crypto. Now, he’s not against borrowing, as he mentions in the video, but explains that borrowing should be done for the right things. These include borrowing for a house or a car since these things are used in everyday life. However, when it comes to investing in these digital assets, it should never be done with such borrowed funds.

BTC still trading above $30,000 | Source: BTCUSD on TradingView.com

The Mad Money host points out that cryptocurrencies are not a safe bet. He calls them “hope stocks” which he advises against investing in hope. Since these are speculative assets, Cramer first says to “admit it’s speculative.” This way, investors don’t end up making the mistake of categorizing them as “Proctor & Gamble”, i.e. thinking they will continue to do well.

Keep crypto in your wallet

Cramer has always expressed his thoughts on cryptocurrencies. They weren’t always bullish, but he never categorically condemned investing in them. He admitted to owning Ethereum which he said he entered after having to buy some for an NFT auction. However, he continues to urge caution when engaging with such speculative and volatile assets.

For each portfolio, he says investors should invest 5% in gold and the remaining 5% in crypto. Recognizing the possibilities of making money from crypto, he agreed that trying to make money with cryptocurrencies is worthwhile.

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Cramer goes further to advise investors interested in cryptocurrencies to stick with the big ones in the market such as Bitcoin and Ethereum. “I would never discourage you from buying crypto because of all the fortunes that have been made in it, and how it could make a whole new group of people, fortunes,” Cramer says. “I wish it was you,” he added.

As of this writing, Bitcoin and Ethereum continue to dominate the crypto space in terms of market capitalization. However, the recent downtrend has since the overall market declined to sit at $1.23 trillion.

Featured image from Livekindly, chart from TradingView.com

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