Crypto

Here’s why some black investors are still bullish on crypto

Artwork: Megan Robinson/Axios

The cryptocurrency bear market didn’t entirely scare off some black investors, who initially embraced the sector as a way to build wealth.

Why is this important: Overnight bitcoin beaten went back over $20,000 after languishing for weeks near $16,000. But the crypto winter has billions erased out of the market capitalization of digital currencies; meanwhile, the ongoing FTX scandal contributed to a lack of trust in financial institutions and in crypto itself.

  • Surprisingly, some hardcore enthusiasts are not rushing out of crypto and are planning to continue investing in the beaten sector.

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

  • The wealth gap with other races some black investors believe could be closed by investing in cryptocurrency, says a report of the Kansas City Federal Reserve published in 2022.
  • 13% of Americans said they bought or traded crypto, while 44% were non-white, according to a investigation by NORC at the University of Chicago published in 2021.

State of play: Admittedly, retail crypto buyers are hardly unaware of the growing risks (it’s hard not to). Still, black investors are slightly more bullish on crypto than their white counterparts, according to a survey conducted by Ariel Investment and Charles Schwab in April 2022, around the time the crypto rout accelerated.

  • It showed that 25% of black people invest in digital coins, compared to 15% of white people.
  • The study also showed that black traders are “twice as likely to rank cryptocurrency as the best overall investment choice” (8% vs. 4% of whites).

What they say : Deidra McIntyre, founder of Black People & Cryptocurrency, a discussion group rooted in Bitcoin technology, told Axios in a statement that crypto crime and business losses dominate public opinion. This can hamper their ability to see cryptos longer term potential.

  • “What’s Happening in Crypto exists in finance and the business sector, but it [should not be ] indicative of how all crypto activities are or should be done,” she said. “We will evolve the crypto knowledge base on more fair, global, trustless, peer-to-peer global transactions.”

Yet investors like Ivan Eberhart are still hodlers. The Atlanta resident bought Bitcoin in 2017, then invested in Binance coin and Chainlink. Eberhart will continue in space because of what he sees as a bright future.

Cryptocurrencies like Bitcoin and Ethereum are a longer-term store of value, Edwardo Jackson, CEO and founder of Cinema Draft LLC told Axios.

  • The cryptocurrency consultant, who created Blacks in Bitcoin, tells Axios he knows of anyone affected by the FTX debacle. Still, Jackson embraces educating investors about cryptocurrency so they fully understand it, he explained.

Yes, but: FTX’s staggering fall has burned a lot of investors, with more shoes yet to fall. He put celebrities under the microscope for their role in amplifying crypto to retail investors.

  • Algernon Austin, director of race and economic justice at the Center for Economic and Policy Research, told Axios that too much emphasis is placed on the benefits of crypto for black investors, instead of its (high) risks. .
  • “I suspect the high rate of black investments in crypto is due to this very heavy marketing of crypto, often by black celebrities. The difference we see with crypto and with more traditional investments is…that crypto was marketed very, very aggressively.”

The bottom line: With distrust of crypto Booming among investors of all races, black crypto buyers are like everyone else: they struggle to figure out what to do next. And while interest remains high, it’s unclear if that will continue.

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