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CNBC’s Jim Cramer urged investors with gains in their cryptocurrency wallets to take profits, saying on Monday he believes digital currencies are likely to face more weaknesses related to the struggling Chinese real estate developer Evergrande.
“I know crypto enthusiasts never want to hear me say sell, but if you’ve got a big payout like me, well, I beg you,” the host of ‘Mad Money’ said. “Don’t let this become a waste. Sell some, stick around for a long time, then let’s wait and see if China changes its attitude towards an Evergrande bailout.”
Cramer said his crypto concerns currently begin with tether, a stable coin pegged to the U.S. dollar. Tether is the third largest cryptocurrency by market value, behind only ether and bitcoin, which are second and first, respectively. Cramer has a position in Ether, which operates on the Ethereum blockchain.
“The problem with tether is that it’s backed by various holdings and about half of it is commercial paper – short-term loans – and a lot of it would be, but we don’t know, Chinese commercial papers, ”Cramer said.
“Tether said they had no exposure to Evergrande,” Cramer admitted. “But tons of Chinese companies are in danger of being crushed by this fiasco, and they are exposed in Evergrande, and it could cause real problems if the dominoes fall here.”
Evergrande is a major real estate developer in China, and beyond real estate it has several other business units operating in industries such as healthcare and electric vehicles. The company has total liabilities of more than $ 300 billion and recently warned investors that it could default on its debts.
Crypto investors need to be vigilant as the Evergrande situation unfolds, even if they do not have a personal attachment, as stablecoin is being used to buy bitcoin and ether, Cramer said. “If the tether collapses, well, it’s going to destroy the entire crypto ecosystem,” he said. “So if you own any crypto in any form and have big wins, I recommend that you take something off the table.”
Cramer stressed that he still sees the potential for cryptocurrencies to go “mainstream,” but thinks it’s important to at least lock in some gains while they’re still there. “At the moment, owning crypto is called a ‘crowded’ business and I don’t want you to lose money if this space continues to be affected by the contagion concerns of Evergrande,” did he declare.
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