The issue of borrowing money to invest in cryptocurrencies like bitcoin has been prevalent in the crypto space. Mostly, there have been many reports about individuals who borrowed money to buy these cryptocurrencies and ended up in massive debt, as they could not make the payments immediately due to the fact that the price of the digital asset crashed. because they are not used to doing so. ,
Jim Cramer, a prominent figure in the investment landscape, has come out to warn against this practice. The Mad Money host had a variety of advice for investors in cryptocurrency in a new CNBC article where he talks about the good, the bad, and the ugly of cryptocurrencies.
Do not buy bitcoin with borrowed money
In a new video from CNBC’s Make It, Jim Cramer offers his advice to young individuals who have found themselves investing in space. He points out that there are advantages to investing in cryptocurrencies, some of which he owns. The profit earned by some in the market has been a drive for others to enter this sector and make their fortune. But too often, these individuals can get sucked in and make terrible decisions.
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Cramer warns about the dangers of borrowing money to buy crypto. Now, he is not against borrowing, as he has mentioned in the video, but points out that one should borrow for the right things. These include borrowing for a house or car as these things are used in everyday life. However, when it comes to investing in these digital assets, it should never be done with borrowed funds.
BTC still trading above $30,000 | Source: BTCUSD on TradingView.com
The Mad Money host points to the fact that cryptocurrencies are not a fixed bet. He refers to them as “ASHA securities”, which he advises that ASH does not invest in. Since they are speculative assets, Cramer says first to “accept that it is speculative.” That way, investors don’t make the mistake of putting them in the “Procter & Gamble” category, which means they’ll continue to do well.
Keep some crypto in your portfolio
Cramer has always been vocal about his views on cryptocurrencies. They haven’t always been sharp but they have never explicitly condemned investing in them. He admitted to owning some Ethereum, which he said he got after buying some for an NFT auction. However, he cautions when engaging with such highly speculative and volatile assets.
He says that for every portfolio investors should invest 5% in gold and 5% in crypto. Recognizing the possibilities of making money in crypto, he agreed that trying to make money with cryptocurrency is legitimate.
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Cramer further recommends that investors interested in cryptocurrencies should stick to the biggest ones in the market, such as Bitcoin and Ethereum. “I would never discourage you from buying cryptocurrency because of all the luck involved, and how it can create a whole new set of people,” Kramer says. “I want you to be,” he said.
At the time of writing, Bitcoin and Ethereum continue to lead the crypto space in terms of market cap. However, the general market has pulled down to $1.23 trillion since the recent downtrend.
Featured image from Livekindly, chart from TradingView.com
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