As the price of gold plunged on Friday, CNBC’s Jim Cramer said the rise of crypto may partly explain the sudden disinterest in the precious metal — a potential sign that the mainstream has flipped the script on Bitcoin (BTC) and digital assets.
When asked why gold isn’t rallying amid the political chaos on Capitol Hill this week, Cramer said the market is either not as chaotic as it seems or that all of the money is going into cryptocurrency:
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) https://t.co/nExv3O7dRm
— Jim Cramer (@jimcramer) January 8, 2021
The price of gold sold off more than $60 on Friday, hitting a low of $1,852.50 per troy ounce on the Comex division of the New York Mercantile Exchange. Bitcoin, meanwhile, surged to new all-time highs above $41,000.
Cramer is a recent convert to Bitcoin and cryptocurrency, having bought the mid-December 2020 dip when BTC was under $18,000. He said of his purchase at the time:
“I will buy — like I usually do — as something comes down. […] I’m going to diversify into some Bitcoin — not a big position for me — but it’s certainly important to be diversified, and Bitcoin is an asset and I want to have a balance of assets.“
If Cramer held onto his BTC, his position has more than doubled by now.
The flagship cryptocurrency continues to outperform gold and every other major asset thanks in part to an influx of new institutional buyers. Measured in bullion, 1 Bitcoin is now worth more than 20 ounces of gold. A week earlier, the Bitcoin-gold rate was around 15 ounces.
The idea that Bitcoin is taking market share from gold is nothing new. A recent analysis from JPMorgan Chase concluded that Bitcoin’s digital gold narrative is pulling investors away from precious metals. The analysts said this trend could intensify as more institutional money pours into the crypto space.