Jim Cramer Advises Investors Exit Crypto as Market Recovers

As Jim Cramer warns investors to exit crypto, Bitcoin and the top cryptocurrencies by market cap have seen gains on the daily charts.

On Tuesday, the host of ‘Mad Money’ suggested that investors withdraw their funds from the cryptocurrency market while they can. “I want you to be able to protect yourself from scams that are designed to fake you out and part you from your money,” Cramer said on CNBC.

Jim Cramer Warns of Potential Losses

In the segment, Jim Cramer drew parallels between the recent banking crisis and his perception of the crypto industry. He emphasized how hedge funds successfully shorted regional banks during the crisis, harming the banks’ shareholders and possibly reducing credit supply.

Cramer expressed his belief that, at this point, cryptocurrencies are primarily “scams” and referred to crypto platforms as “poppycock.” Cramer stated that cryptos are mostly “scams” and called cryptocurrency platforms “poppycock.” He recommended participants on such platforms sell their holdings and switch to safer investments like Treasury bonds.

Cramer’s opinions are supported by the Securities and Exchange Commission’s (SEC) recent action against cryptocurrency heavyweights Binance and Coinbase. Cramer said, “I have no idea why anyone would still keep the money with these guys.”

 Cramer underlined his worry by stating that nothing drives individuals out of the market faster than naked manipulation. 

He stated that he wishes someone would inform people about the possibility of losing everything when investing in crypto.

Inverse Jim Cramer Approach Amid Regulatory Uncertainty

On the other hand, Twitter users are placing bets on the March-launched Inverse Jim Cramer ETF (SJIM). Many predicted that the value of cryptocurrency would reach a new all-time high and mocked Cramer’s guidance.

At the time of writing, CoinGecko’s aggregate market cap for cryptocurrencies had increased by approximately 3% during the previous 24 hours. The market is still above the $1 trillion threshold, while Bitcoin has also increased by 4% on the daily charts.

Seeking Alpha reported that the Inverse Jim Cramer approach performed well in the first quarter of 2023. The product outperformed the S&P 500 index with a year-to-date return of 6.59%.

However, Cramer’s comments highlight the regulatory ambiguity surrounding the larger market following the SEC intervention. The regulator filed a lawsuit against Coinbase and Binance for allegedly engaging in improper and unlicensed activity.

SEC Strongarms Crypto

The former head of the Commodity Futures Trading Commission (CFTC) discussed what might happen next in an interview with CNBC’s Jim Cramer.

According to Timothy Massad, the results of the legal actions brought against the major cryptocurrency exchanges will impact the future of cryptocurrencies.

According to Massad, the agencies must create a regulatory framework that safeguards investors, thwarts fraud and manipulation, and clarifies whether digital tokens should be regarded as securities for the cryptocurrency industry to flourish.

Massad argued that the business models of these exchanges are not aligned with the workings of traditional securities markets.

Meanwhile, crypto players are also criticizing the SEC for its selective approach. American businessman Mark Cuban said that around 18,000 stocks that trade over-the-counter (OTC) or on the Pink Sheets call for investor protection.

These stocks are not listed on major exchanges and raise concerns about whether these stocks are legitimate companies. Cuban questioned if SEC is doing enough to protect investors who trade these stocks.

It’s crucial to realize that equities listed on OTC and Pink Sheets often have fewer regulatory requirements. This is against those listed on significant exchanges like the New York Stock Exchange (NYSE) or NASDAQ.

As a result, investing in these stocks could carry a higher risk. This is because they are less transparent and don’t adhere to the same standards as exchange-listed companies.