In a bombshell call that sent shockwaves through the crypto community, CNBC’s Jim Cramer advised investors to hold bitcoin over shares of MicroStrategy, the publicly traded company with the largest BTC treasury in the world. The former hedge fund manager’s contrarian view came during Monday’s episode of Mad Money, his popular stock picking show, in response to a viewer question.
“If you want to own bitcoin, own bitcoin,” Cramer declared emphatically. “I own bitcoin. You should own bitcoin. Bitcoin is a great thing to have in your portfolio.” The financial pundit’s bullish bitcoin endorsement took many by surprise, given his history of cautioning against crypto investments. Even more startling was his blunt dismissal of MicroStrategy stock as a bitcoin proxy play. “But not MicroStrategy,” Cramer added without further elaboration, leaving viewers puzzling over the reasoning behind his unexpected bitcoin-over-MSTR call.
Cramer’s Contrarian Call Meets Inverse Cramer Theory
As one of Wall Street’s most prominent and polarizing voices, Jim Cramer’s market moves often generate as much skepticism as they do devotion. In fact, the so-called “Inverse Cramer” theory—a humorous meme positing that betting against Jim’s picks tends to produce alpha—has become an article of faith among his critics. That contrarian approach gained enough traction to spawn the Inverse Cramer ETF in 2022, which used AI algorithms to automatically take the other side of Cramer’s stock selections, before folding in early 2024.
In this context, Cramer’s ringing bitcoin endorsement over MicroStrategy shares could be interpreted as a positive signal for MSTR bulls and BTC bears in the coming weeks. After all, as recently as January 2024, Cramer cautioned that bitcoin was likely topping out and advised exiting positions. BTC promptly embarked on a blistering rally, surging more than 100% since that bearish prognostication.
MicroStrategy’s Massive Bitcoin Bet
With over 417,107 bitcoins on its balance sheet, MicroStrategy lays claim to the title of the world’s largest public company holder of the pioneer cryptocurrency. At a valuation of more than $48 billion based on current bitcoin prices above $103,000, the enterprise software firm’s aggregated BTC stash accounts for virtually all of its $50 billion market capitalization.
Under the leadership of CEO and bitcoin bull Michael Saylor, MicroStrategy has systematically converted its cash holdings and future cash flows into bitcoin since 2020. Saylor views BTC as a risk-off reserve asset superior to holding dollars on the balance sheet in an inflationary environment. That conviction prompted the company to float a $500 million bond offering in 2022 for the express purpose of purchasing additional bitcoin.
Market Implications of Cramer’s Call
Whether one subscribes to Inverse Cramer theory or takes Jim’s advice at face value, his divergent outlook on bitcoin versus MicroStrategy shares carries thought-provoking implications. On one level, recommending naked BTC exposure over a stock whose sole function is acquiring and holding bitcoin seems counterintuitive. MicroStrategy’s embedded leverage should amplify bitcoin’s upside potential, at least in theory.
We remain committed to our bitcoin strategy and will continue to educate the market on the merits of bitcoin as a treasury reserve asset and why we believe it will serve as a primary driver of shareholder value creation over the long term.
— Michael Saylor, MicroStrategy CEO
However, Cramer’s skepticism toward MSTR as a bitcoin play may reflect underlying concerns about the firm’s aggressive leverage, opportunity cost of eschewing its legacy software business, and key man risk centered around Michael Saylor. The prospect of margin calls triggering forced liquidations of MicroStrategy’s bitcoin holdings in a crypto correction scenario continues to overhang the stock.
Another interpretation is that Cramer views this bitcoin rally as overextended in the near term and anticipates a pullback that would disproportionately punish MSTR shares. In that light, advocating trim bitcoin exposure while jettisoning leveraged bets like MicroStrategy aligns with Cramer’s pattern of turning cautious after major run-ups, even in assets he broadly favors.
Conclusion: Bitcoin in Focus, MSTR as Bellwether
Regardless of one’s personal take on Jim Cramer’s latest crypto call, his starkly divergent stances on bitcoin and MicroStrategy merit consideration. If the Inverse Cramer theory holds true, MSTR could be poised to outpace bitcoin’s already impressive trajectory. Conversely, a drop in MicroStrategy shares or executive departures in the coming weeks might presage a broader bitcoin reversal, validating Cramer’s warning.
As ever in the mercurial world of crypto investing, expect the unexpected. In the meantime, keep a close eye on the relative performance of bitcoin and MicroStrategy as a potential bellwether for the overall crypto asset class. With Jim Cramer’s contrarian call adding to the intrigue, the interplay between BTC and MSTR could prove especially revealing in the near term.
