Illustration: Megan Robinson / Axios
The cryptocurrency bear market hasn’t spooked some black investors, who originally embraced the sector as a way to build wealth.
why does it matter: Overnight, battered bitcoin rose again above $20,000 after staying near $16,000 for weeks. But the cryptocurrency winter wiped out billions from the cryptocurrency market value. Meanwhile, the FTX scandal has contributed to a lack of trust in financial institutions and cryptocurrencies themselves.
- Surprisingly, some ardent enthusiasts are in no rush to quit cryptocurrency, and plan to continue investing in the battered sector.
Zoom outIn 2020 and 2021, the volatile asset class has become a hot topic among black social media users. They viewed digital currencies as a way to bridge the economic divide, create wealth, and democratize the global financial system.
- Some black investors believe that the wealth gap with other races can be closed by investing in cryptocurrency, according to a report due in 2022 by the Kansas City Federal Reserve.
- 13% of Americans report either buying or trading cryptocurrency, while 44% are not white, according to a survey conducted by NORC at the University of Chicago and published in 2021.
Play status: To be sure, retail cryptocurrency buyers can hardly ignore the rising risks (it’s hard not to). However, black investors are more bullish on cryptocurrencies than their white counterparts, according to an April 2022 survey by Ariel Investment and Charles Schwab, around the time of the cryptocurrency’s rapid trajectory.
- It showed that 25% of blacks invest in digital currencies, compared to 15% of whites.
- The study also showed that black traders are “twice as likely to rate cryptocurrency as the best investment option overall” (8% vs. 4% of whites).
what are they saying: Deidra McIntyre, founder of Black People & Cryptocurrency, a discussion group rooted in Bitcoin technology, told Axios in a statement that crypto crime and trading losses dominate public opinion. This may hinder their ability to see crypto potential in the long term.
- “What is happening in cryptocurrency is already in the finance and corporate sector but it is already there [should not be ] giving an indication of how or what all cryptocurrency businesses should do,” she said. “We will move the cryptographic knowledge base for more fair, global, and trusted peer-to-peer transactions.”
However, investors like Evan Eberhardt They are still deceivers. The Atlanta resident bought Bitcoin back in 2017 and later invested in Binance Coin and Chainlink. Eberhart will continue in space because of what he sees as a bright future.
Cryptocurrencies such as Bitcoin And Ethereum is a long-term store of value, Eduardo Jackson, CEO and founder of Cinema Draft LLC, told Axios.
- The cryptocurrency advisor, who created the Blacks in Bitcoin, told Axios that anyone affected by the FTX disaster. However, Jackson embraces educating investors about cryptocurrency so that they fully understand it, he explains.
Yes, but: FTX’s stunning collapse has burned a lot of investors, with more boots continuing to fall. Celebrities have come under scrutiny for their role in amplifying cryptocurrency for small investors.
- Algernon Austin, director of race and economic justice at the Center for Economics and Policy Research, says Axios is too focused on the positives of cryptocurrency for black investors, rather than its (high) risks.
- “I think the high rate of Black investment in cryptocurrency is this very heavy marketing of cryptocurrency, mostly by black celebrities. The difference we see with cryptocurrency and with more traditional investing is… that cryptocurrency has been marketed very aggressively.”
bottom line: As mistrust of cryptocurrencies grows among investors of all races, black cryptocurrency buyers are just like everyone else: struggling to figure out what’s next. And while interest remains high, it’s not clear if that will continue.