Why Some Black Investors Are “Holding” Crypto Despite Winter, FTX

The crypto bear market did not completely scare some black investors who originally embraced the sector as a means of building wealth.

Important reasons: Overnight, battered Bitcoin surged above $20,000 after weeks of stagnation near $16,000. But crypto winter has wiped billions of dollars out of the digital currency market cap. Meanwhile, the unfolding FTX scandal has led to a lack of trust in financial institutions and cryptocurrencies themselves.

• Surprisingly, some hardcore enthusiasts are in no rush to move away from cryptocurrencies and plan to continue investing in the battered sector.

zoom out: In 2020 and 2021, the volatile asset class will be a hot topic among black social media users. They saw digital currencies as a way to bridge economic inequality, create wealth, and democratize the global financial system.

• According to a 2022 report by the Kansas City Federal Reserve Board, some black investors believe the wealth gap with other races could be bridged by investing in cryptocurrencies. I’m here.
• A University of Chicago NORC study published in 2021 found that 13% of Americans reported buying or trading cryptocurrencies, 44% of whom were non-white.

State of play: Indeed, retail buyers of cryptocurrencies are largely ignoring (and difficult to ignore) the increased risk. However, according to an April 2022 study by Ariel Investments and Charles Schwab, black investors were slightly more bullish on cryptocurrencies than white investors when the cryptocurrency crash accelerated. be.

• It shows that 25% of black people are investing in digital coins compared to 15% of white people.
• The study also showed that black traders were “twice as likely to rank cryptocurrencies as the best investment option overall” (8% vs. 4% for whites).

What they say: Deidra McIntyre, founder of Black People & Cryptocurrency, a discussion group rooted in Bitcoin technology, told Axios in a statement that cryptocrime and transaction losses are dominating public opinion. That may hinder their ability to see the long-term potential of cryptocurrencies.

• “What’s happening with cryptocurrencies already exists in the financial and corporate sectors, [should not be ] It shows how all crypto business should or should be done,” she said. “We are moving towards a crypto knowledge base of peer-to-peer global transactions that is fairer, more global, more trustless.”

Yet investors, like Ivan Everhart It’s still Hodler. The Atlanta resident bought Bitcoin in 2017 and invested in his coin and Chainlink on Binance. Eberhart sees a bright future and will continue in this area.

Cryptocurrencies such as Bitcoin Ethereum and Ethereum are long-term stores of value, Edwardo Jackson, CEO and founder of Cinema Draft LLC, told Axios.

• The cryptocurrency consultant who created Blacks in Bitcoin told Axios he knows people affected by the FTX debacle. Still, Jackson welcomes educating investors about cryptocurrencies so that they can fully understand them, he explained.

Yes, but: FTX’s shocking drop has left many investors scorched and even more shoes dropped. It has put the role of celebrities in expanding crypto to a small number of investors under the microscope.

• Algernon Austin, director of race and economic justice at the Center for Economic and Policy Studies, told Axios that there is too much focus on the benefits for black investors instead of the (high) risks of cryptocurrencies. .
• “The high rate of black investment in cryptocurrencies is often attributed to the very large-scale marketing of cryptocurrencies by black celebrities. The difference between cryptocurrencies and traditional investments is Cryptocurrencies are being sold very aggressively.”

To the point: As distrust of cryptocurrencies grows among investors of all races, black cryptocurrency buyers, like everyone else, are struggling to find their next move. Interest remains high, but it is not clear if it will continue.