Cramer memorably said in April that he was “a believer” in Ethereum and suggested that investors could “easily” bank 40% returns on the asset. It was trading at around $3,000 at the time.
Now that crypto prices have dropped, Jim Cramer has indicated that he is not much of a fan of the emerging asset class after all.
“Crypto really does seem to be imploding. Went from $3 trillion to $1 trillion. Why should it stop at $1 trillion? There’s no real value there,” says @jimcramer on #crypto. “What an awful asset. NFTs sold to you. Made up.” pic.twitter.com/09e5ST8q0N
— Squawk Box (@SquawkCNBC) July 5, 2022
Speaking on CNBC’s Squawk Box Tuesday, the former hedge fund manager discussed the months-long downward trend spilling across global markets, remarking that he was most interested in the current state of the cryptocurrency market. “Crypto really does seem to be imploding. When it goes from $3 trillion to $1 trillion, why should it stop at $1 trillion? There’s no real value there,” he said in respect to the sharp decline in the global crypto market capitalization over the past eight months, before commenting on the growing number of companies facing turmoil due to the recent market collapse. “How many companies can Sam Bankman-Fried save?” he added.
Last week, the U.S. arm of Bankman-Fried’s FTX exchange struck a deal with BlockFi to acquire the firm for up to $240 million amid the lender’s insolvency issues. Alameda Research, the trading firm founded by Bankman-Fried, also stepped in to bail out Voyager Digital last month as the firm announced it was suffering its own liquidity crisis. The spillover effects of Terra’s recent implosion and Three Arrows Capital’s blowup have wreaked havoc across the industry and partly contributed to the recent market slide. After a series of firms revealed their troubles, Bankman-Fried told Forbes that he thinks many more exchanges could be “secretly insolvent.”
Cramer’s latest comments will likely come as a surprise to some given his previous thoughts on crypto. In April, he declared on Squawk Box that he thought Ethereum was “terrific” and that he was “a believer.” He then said that investors “could easily get [returns of] 35 or 40%.” ETH has since dropped from a price of $2,970 to $1,100, meaning anyone who invested when he made the comments would have accrued losses of over 60%.
Cramer also said in June 2021 that he liked Ethereum over Bitcoin because “people use [ETH] to be able to buy things,” revealing that he had bought ETH and would continue to add to his holdings. It was trading just over $2,000 at the time. Prior to diving into Ethereum, he recommended investors allocate 5% of their portfolios to Bitcoin as it was leading the crypto bull run in early 2021.
Along with the rest of the cryptocurrency market and other risk-on assets, ETH has had a rocky 2022, down about 70% year-to-date. Notably, major tech stocks like Meta, Netflix, and PayPal have all posted losses of over 50% amid the Federal Reserve’s interest rate hikes and growing fears of a global recession.
While Cramer pointed to the recent crypto firm blow-ups and NFT market to make his case for why the space had no value, he didn’t mention any recent innovations like DeFi trading, stablecoins, Layer 2 rollups, or the value of NFT art itself in his comments.
During market downturns, crypto believers are known for making calls to one another to “HODL” and “buy the dip,” mantras that advocate for holding onto and accumulating more coins whenever charts turn red. Despite his previous comments, it would appear that Cramer is no longer one of them.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
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