“The charts, as interpreted by Carley Garner, suggest you should ignore the crypto cheerleaders now that bitcoin is bouncing back. And if you’re serious about a real hedge against inflation or economic chaos, she says that you should stick to gold. And I agree.” he said.
Bitcoin continued to win on Mondayreaching as high as $23,155.93 as investors bet the Federal Reserve will slow its pace of interest rate cuts or stop them altogether.
The price of the digital currency soared to $23,333.83 on Saturday for the first time since August, according to Coin Metrics. This marks a nearly 39% rise in bitcoin since the start of this month.
To explain the analysis by Garner, who is the senior commodities market strategist and broker at DeCarley Trading, Cramer looked at the daily chart of Bitcoin futures and the high-tech Nasdaq-100 dating back to March 2021.
Garner pointed out that the two indices are trading almost in parallel, suggesting that it is a risky asset rather than a currency or a stable store of value, according to Cramer.
“Imagine business owners trying to transact with shares of Facebook or Google…it’s ridiculous, they’re too volatile. Bitcoin is no different,” he said.
The reason they negotiate so closely is because of “counterparty risk,” which is the likelihood that the other party to an investment or transaction won’t fulfill their end of the bargain, Cramer said.
“Of course, you could just own Bitcoin directly in a decentralized wallet – which protects you from counterparty risk – but if you ever want to use it for anything, risk is back on the table. And like FTX customers have learnedit can be devastating,” he said. “But gold, well, it’s the opposite.”
Disclaimer: Cramer’s Charitable Trust owns shares of Meta Platforms and Alphabet.
For more analysis, watch Cramer’s full explanation below.