Big money ‚all going to crypto‘ at the expense of gold

Jim Cramer: big money ‚all going to crypto‘ at the expense of gold

The CNBC presenter explained why gold has had such a bad week, in conditions that would normally be considered favourable

On Friday, as the price of gold plummeted, CNBC expert Jim Cramer said that the rise of cryptos could partly explain the Bitcoin Machine sudden disinterest in the precious metal: this, potentially, would be a sign that the mainstream has completely changed its mind about Bitcoin (BTC) and digital assets.

When asked why gold isn’t rising, even in this politically chaotic week, Cramer said that all the money could be going into cryptos:

„The market is not as chaotic as it seems… or else all the money is going to cryptos! But remember, there hasn’t been a consistent inflow into quality assets (like Treasury bonds) yet.“

either it is not as chaotic out there so gold doesn’t jump or it’s all going to crypto! But remember there has been no flight to quality (treasurys)
– Jim Cramer (@jimcramer) January 8, 2021

Yesterday the price of gold fell by more than $60 to a low of $1,852.50 per troy ounce on the New York Mercantile Exchange. Bitcoin, meanwhile, hit a new high above $40,000.

Cramer has only recently entered the Bitcoin and crypto market, having bought the mid-December 2020 dip when BTC was below $18,000. At the time, the expert had said:

„I will buy, as I usually do, as an asset goes down. […] I’m going to diversify into Bitcoin: it’s not a particularly heavy exposure for me, but it’s certainly important to diversify. Bitcoin is an asset and I want to have a balance of various different assets.“

If Cramer HODLed the BTCs, the value of his investment has more than doubled since then

The dominant crypto continues to perform much better than gold and every other asset, thanks in part to the influx of new institutional buyers. Currently, 1 BTC is worth more than 20 ounces of gold. Just a week earlier, the BTC/gold exchange rate was around 15 ounces.

The idea that Bitcoin is taking market share away from gold is hardly new. A recent analysis by JPMorgan Chase concluded that the theory that Bitcoin is „digital gold“ is driving investors away from precious metals. Analysts said this trend could intensify as more and more money from large institutional players pours into the crypto space.