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Cryptocurrencies could continue to implode

 


CNBC's Jim Cramer is a controversial figure in the crypto industry. The host of the popular show Mad Money has changed his stance on the burgeoning asset class on numerous occasions, taking a bearish stance on the recent price action.


The total capitalization of the crypto market has reached an all-time high of almost $3 trillion. A record for an industry that's barely a decade old but has lost over 60% of its value since early 2022. 


The industry broke the $1 trillion market cap a few weeks ago, and according to Cramer, there's no reason to rein in the losses. On an episode of CNBC's Investing Club, Cramer spoke about the macroeconomic factors affecting digital and traditional assets.


The major stock indices in the US have moved lower due to the Federal Reserve (Fed) raising interest rates. The impact of this monetary policy has taken its toll on cryptocurrencies and risky assets.


Cramer argued that US dollar strength is another factor affecting traditional finance. The currency is currently trading at 106 on the DXY index, its highest level since 2003. A strong dollar often leads to losses in stocks and risky assets, as global markets have seen. Cramer said:


At the moment it looks like everything is bad. I won't deny that every asset class is being hit. The one that interests me the most is crypto (…).


The nascent asset class has boomed over the past two years, attracting fresh capital. If the crypto market continues its downtrend as Cramer predicted, the economic situation could get worse. The CNBC host added:


A lot of people are into crypto. Crypto really seems to be imploding from $3 trillion to $1 trillion, why would it stop at $1 trillion? There is no real value there.


Could Cramer be right?

Despite his recent comments, Jim Cramer was known to have sold his Bitcoin and Ethereum holdings in 2021 before cryptocurrencies hit their all-time highs. In fact, in June 2021, he sold during the two-month downmove that pushed the price of BTC from $60,000 to around $30,000.


At the time, the CNBC host said he didn't "need" the cryptocurrency and pointed to the potential negative impact of China's ban on BTC mining. In 2018, when BTC fell to $3,000 from its previous all-time high of $20,000, Cramer famously said that the “sun is setting” on Bitcoin and the crypto industry.


The past has proved him wrong on numerous occasions. While the industry could face further losses due to the macroeconomic factors, BTC and other cryptocurrencies could show interesting levels for investors looking to add to their long-term holdings.

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