Bitcoin BTC/USD has soared past the $67,000 mark recently, marking a significant resurgence since 2021. Market guru, CNBC’s Jim Cramer, has his finger on the pulse of why the world’s largest cryptocurrency is hitting new highs.
Bitcoin’s Surging Momentum
What To Know: Bitcoin’s incredible momentum is leading it back towards the record highs it established in November 2021. While many credit this surge to the approval of spot Bitcoin ETFs and anticipation of the halving event in April, Cramer has a different theory on what’s fueling the surge.
The Fiat Currency Factor
“I first thought the rally in Bitcoin was because of the ETFs,” Cramer revealed on CNBC’s “Squawk On The Street” on Monday. However, he believes the driving force goes beyond that. “I just think people are just saying ‘You know what, I don’t trust these fiat currencies.’”
Cramer elaborated that Bitcoin is now serving as a diversification hedge against fiat currencies like the U.S. dollar, which lack intrinsic value due to being untethered to tangible assets such as gold. The severance of the U.S. from the gold standard in 1971 has led to a significant erosion in the purchasing power of the U.S. dollar over the past five decades.
Bitcoin as a Dollar Hedge
In a recent report, BofA analyst Michael Harnett linked Bitcoin’s surge to the escalating U.S. national debt, which is ballooning at a rate of $1 trillion every 100 days and projected to surpass $35 trillion by April. With Bitcoin’s limited supply of 21 million coins, it is increasingly viewed as a safeguard against the further devaluation of the dollar and other fiat currencies.
“I think younger people believe that there is no way that we can ever make good other than to reflate, inflate, to make it so we’re paying with cheaper dollars,” Cramer opined.
Cautious Optimism for Cryptocurrency
Although Cramer has wavered on Bitcoin and the broader crypto sector in recent times, he hinted at a potential change in stance. Having initially invested in Bitcoin in early 2021 and exiting near its peak, Cramer adopted a cautious approach amidst industry challenges. However, recent remarks suggest a potential reevaluation.
Last week, Cramer indicated a positive outlook for Ethereum ETH/USD, asserting that it could only ascend from its current levels. Furthermore, he suggested that the approval of Ethereum ETFs in the future could ignite another crypto surge.
Anticipating the Next Phase
“I thought a lot of this was the ETF, I admit that … There will be an Ethereum ETF, and you’ll have to go buy that one … just get ready,” Cramer advised.
$BTC Price Action: Bitcoin displayed a 6.02% increase over a 24-hour period, reaching $66,644 at the time of reporting.
Photo: Image by Eivind Pedersen from Pixabay.