CNBC's Jim Cramer warns savvy investors that the digital currency bitcoin is like "monopoly money."
He said essentially that if you invest in the virtual money, you're engaging in "pure gambling" and you have better odds of winning a jackpot in Las Vegas.
To be sure, bitcoin extended its eye-popping rally on Wednesday, breaking above $12,000 to a record high despite questions about the cryptocurrency’s real value and worries about a dangerous bubble, Reuters reported.
Bitcoin’s meteoric ascent of over 10-fold from below $1,000 at the start of the year has drawn regulatory scrutiny around the world.
"It's kind of like monopoly money," said Cramer, the host of CNBC's "Mad Money."
"Obviously, there's people who use it. If you ever say anything bad about it, there's like this 'bitcoin mafia' that comes after you. But it is an oddity that has nothing to do with us" as investors.
"It's just pure gambling at this point," Cramer told "Squawk Box." "I mean if you want to gamble, go to Vegas. Vegas is fabulous," he said.
"I mean honestly, what's the difference between bitcoin and trying to figure out the Super Bowl? I mean it's gambling," he added.
Bitcoin received a boost after Friday’s announcement by the main U.S. derivatives regulator that it would allow CME Group and CBOE Global Markets to list bitcoin futures contracts.
The move opens the door to added regulation but also more mainstream adoption, as bitcoin futures and other derivatives would make it easier to trade the new asset class.
Some high profile individuals such as Nobel Prize-winning economist Joseph Stiglitz have said the cryptocurrency should be outlawed, Reuters reported.
“It took a long time to establish the methodology and the way bitcoin was traded. The original appeal came from the fact they were unregulated. However it’s clearly moved out of those shadows and into center stage,” said Mick McCarthy, CMC Markets’ chief market strategist in Sydney.
“We are in the throes of a bubble market, and one of the characteristics of a bubble market is that there is no way to know when the bubble will burst.”
The current craze for bitcoin, and cryptocurrencies in general, have been likened by some to the 17th century Dutch tulip mania and more recently the dotcom bubble.
Bitcoin was last up 4.48 percent at $12,200.40 on the Luxembourg-based Bitstamp exchange after surging to the record peak of $12,276.00.
“There is a lot of money flowing into bitcoin right now, mostly motivated by ”fear of missing out“ and greed,” said Leonhard Weese, president of the Bitcoin Association of Hong Kong.
(Newsmax wire services contributed to this report).
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