July 6, 2022

Crypto Crash Hits Black Americans The Hardest

The cryptocurrency market has drastically fallen over the years, with the market decreasing in value by more than $1 trillion. The recent downfalls have shaken the entire cryptocurrency market and resulted in many Black investors experiencing severe losses.

One of the most popular cryptocurrencies, Bitcoin, fell below $20,000 for the first time in 2020 and has been steadily declining by more than 70%. Over the past seven months, its value has shrunk more than ever, consequently impacting millions of investors in the cryptocurrency market.

According to the Financial Times, 25% of Black American investors owned cryptocurrencies at the start of the year, compared to 15% of their white counterparts. Unfortunately, this has made many Black investors more prone to financial loss.

“This is not a ‘get rich quick scheme’. There are massive target ads that are targeting our community.”

A recent survey by Business2Community revealed that 40% of Black investors who owned cryptocurrencies, were under the age of 40, meaning many were new to the space. The attraction to building wealth and their newfound excitement for investing led many to the platform.

“Ninety-eight percent of these cryptocurrencies were not designed to do anything other than extracting money from people’s bank accounts,” said Najah Roberts, a former financial advisor and the founder of cryptocurrency education center Crypto Blockchain Plug.

“This is not a ‘get rich quick scheme’. There are massive target ads that are targeting our community.”

Why is crypto still so popular?

Despite the digital currency putting investors at vast risks of losses, some Black business owners have decided to continue investing in the market.

“Young Black America is just now getting to a point where we have the amount of freedom to have the opportunity to invest in alternative strategies besides real estate,” said Dennis McKinley in an interview with Financial Times.

McKinley, a small-business owner in Atlanta, reports that crypto coins roughly make up 30% of his overall portfolio. “I think it’s important to learn and get out there.”

Are celebrities partly responsible?

There is a long list of Black celebrities who have jumped on the crypto bandwagon, using their platform to promote the digital currency to the financially weak. The influencer and celebrity endorsements have lured many Black investors to crypto.

Recently, Jay-Z was criticized for joining forces with Twitter founder, Jack Dorsey to launch a financial literacy program called The Bitcoin Academy. The program saw the pair teach residents in Jay-Z’s hometown about the world of cryptocurrency and how to avoid scams.

Many highlighted the fact that cryptocurrency ads were specifically advertised to people living in marginalized communities due to the fact that they are more likely to seek alternative routes to generating wealth.

Kumba Kpakima

Kumba Kpakima is a tech reporter at POCIT. A documentary about the knife crime epidemic in the UK got her a nomination for the UK's #30toWatch Young Journalists of the Year.