Jim Cramer Warns Against Fear-Driven Selling, Suggests Bitcoin and Gold as Protective Options

Investor fears spiked again after Moody's downgraded the U.S. government's debt rating, but CNBC's Jim Cramer advised a different response.

Investor fears were running high again after Moody’s downgraded the U.S. government’s debt rating, but CNBC’s Jim Cramer had a different message for investors. Instead of panicking, Cramer advised managing emotions and considering digital assets like Bitcoin as a protective option in uncertain times.

What Happened: Moody’s decision to downgrade the U.S. debt rating from Aaa to Aa1, announced Friday evening after markets closed, sparked a volatile start to the week.

The Dow Jones was down around 300 points and the S&P 500 fell by 1% in early Monday trade. However, the market recovered later in the session. The Dow closed up 0.32%, Nasdaq advanced 0.02% and the S&P 500 edged up 0.09%.

But Cramer urged investors not to be afraid, as this was a common theme that played out after previous U.S. credit downgrades.

“They used to say, ‘Don’t sell after six down days.’ Now they should say, ‘Don’t sell after a downgrade.’ ” Cramer said, adding that this selling strategy hadn’t worked in previous instances, like the S&P downgrade in 2011 or the Fitch downgrade earlier in 2023.

"You are being given an early warning to invest more - not more aggressively, but more of what you can save," the Mad Money host said.

Related Link: Is A Credit Downgrade Imminent For China As Country Faces Economic Headwinds?

Why It’s Important: Cramer advised those worried about the rising national debt to consider investing in assets outside of the stock market, suggesting gold and Bitcoin as options during times of fiscal uncertainty.

“Fear is what must be tamed if you want to be a good investor,” Cramer said, adding that people often make bad investment decisions when they panic.

Bitcoin, in particular, has shown resilience amid recent volatility. After the news of the U.S. credit downgrade surfaced, Bitcoin’s price showed some turbulent swings.

However, the flagship cryptocurrency has managed to remain above a key support level, and its resilience is continuing to be observed.

According to Benzinga Pro, Bitcoin was trading at $104,000 at the time of writing.

Those who are concerned about the government borrowing too much should be investing in gold and Bitcoin, Cramer said.

“The people who write these are either fools who know nothing or incredibly shrewd short sellers who really need to spread fear because of their business model,” Cramer said.

Bitcoin Open Interest Hits $74 Billion: According to data from Coinglass, Bitcoin’s open interest in the futures market reached $74 billion, marking one of the highest levels in recent times and suggesting significant trader activity.

Bitcoin price is currently showing some volatility as it attempts to break through the $107,000 resistance. After a brief rally to that level, it encountered resistance twice.

Despite the fluctuations, Crypto expert Rekt Capital pointed out that BTC closed the previous weekly candle above the $103,000-$104,000 resistance.

Analysts are attributing the bullish activity to the anticipation of interest rates coming down and inflation moderating, both of which are favorable for cryptocurrencies.