“I think the short selling is just going to annihilate people when you can start trading it,” Cramer said after talking with sources in the bitcoin community. A short seller is essentially taking a position on the belief that an asset price will fall instead of rise. Bitcoin futures will allow bitcoin shorts on a widespread basis.
“Once this thing starts trading the futures, they are just going to kibosh it,” Cramer said on “Squawk on the Street.” “You’re going to see a lot of shenanigans.”
Bitcoin rocketed above $19,000 Thursday on the Coinbase exchange before tanking. Pressure continued Friday, with the cryptocurrency falling nearly 18 percent at one stage.
Cramer has been a vocal critic of bitcoin, warning investors that it’s like “‘Monopoly’ money” and people would be better off going to Vegas.
Critics, including JPMorgan Chairman and CEO Jamie Dimon, doubt the legitimacy of bitcoin. Dimon has repeatedly called it a “fraud.” But proponents argue the digital currency is a good medium of exchange and a way to store value like gold.
“If you’re in there buying it, buying bitcoin, you got to be aware there’s going to be people who are going to sell it. They’ve been waiting to short it to you,” Cramer said.
“The propensity of people when futures start would not be to bid it up after this turmoil that we’ve had,” Cramer added.
Cramer: Bets against bitcoin will 'annihilate' the digital currency once futures begin trading