- 38% of black investors under 40 own cryptocurrency, compared to 29% of white investors under 40.
- When the price of bitcoin fell in June, the Black community was disproportionately affected.
- Kiersten and Julien Saunders of rich & REGULAR say you can still bounce back and build wealth.
After a long bull run in 2021, the price of bitcoin has fallen 50% from $42,733 at the peak of 2022 to $24,109 at the time of writing. Major cryptolenders such as Voyager and Celsius have filed for bankruptcy, freezing the assets of millions of investors.
Black investors in particular are disproportionately affected by crypto crashes. According to a study by Ariel Investments, 25% of black Americans own cryptocurrency compared to only 15% of white Americans. Young people are investing even more, with 39% of black investors under the age of 40 owning cryptocurrency compared to 29% of white investors in the same age group.
Kiersten and Julien Saunders, who address the Black community directly when sharing their story of financial independence on their blog, rich & Regular, tell Insider: “There is pent-up frustration in the Black community, especially among those who felt that crypto was a opportunity to catch up and make sure we don’t lose out on another boom.”
The Saunderses also point out that the economic disadvantage experienced by many black Americans makes them vulnerable targets for crypto-marketing. “The idea of fast, high-risk money,” they say, “is more likely to be embraced by more financially fragile people. When you’re broke, or trying to catch up, you start thinking that investments should feel like casinos. “
For anyone needing to bounce back from their crypto losses, Saunders has three pieces of advice to get back on the wealth-building track.
1. Find stable and diverse sources of income
“Let’s learn from the pitfall of putting all our eggs in one basket,” says Julien, “and let’s start creating multiple baskets that have different abilities to grow.” When making new investments, the pair suggest finding less volatile investments — like index funds, bonds or real estate — to balance out the volatility of your crypto holdings.
He adds, “Some people might say, ‘Well, I define diversity as 60% of it in bitcoin, 20% in Ethereum, and 20% in another coin, and I’m like, No. I mean, really diverse, less volatile assets.”
2. Plan for volatility by having a healthy emergency fund
“At this point, even in the stock market, you have to plan for volatility in 12- to 18-month sprints,” says Kiersten. “That’s just the world we’re in right now.” She specifically suggests running numbers for worst-case scenarios when deciding whether or not to invest in a new asset.
The best insurance to protect against risk, says Kiersten, is to ensure that you have a fully padded emergency fund. An emergency savings fund holds three to six months of living expenses, usually held in a high-yield savings account that is easy to access during an emergency.
“Making sure you have a cash flow plan before you make new investments is important, because nothing is going to go on forever,” she says, reminding us that there are very few guarantees in the market.
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3. Choose new money heroes
Black celebrities such as Jay-Z, Snoop Dogg and Spike Lee have endorsed cryptocurrency in the past, encouraging black communities to sign on to an investment vehicle with fewer barriers to entry compared to the stock market or real estate.
“Now is the time to ask yourself if you may have outgrown the financial hero,” says Kiersten. The Saunders often teach communities the concept of “stealth wealth,” the idea that building wealth doesn’t have to be flashy or excessive.
Says Kiersten, “Every time you’ve lost money in the market is an opportunity to reevaluate. Ask yourself: Do I still think this person, or this community, should be my financial role model? Just reevaluate so you don’t.” wrong again.”