'We Are The First Group To Lose': Black Americans Hit Hard By Crypto Crash

Digital currencies have fallen drastically, losing over 50% of their value alone this year.

With consistent reports of plummeting value, the question arises: who is really affected?

A study by Ariel Investments found that, on average, black Americans own significantly more than their white counterparts. About a quarter (25%) of Black Americans own crypto, and when looking at investors under 40, that number jumps to 38%. According to the data, 15% of white investors own crypto and 29% are under the age of 40. Black investors were more than twice as likely (11%) to name crypto as their first investment compared to white investors (4%).

Terri Bradford, a research specialist at the Federal Reserve Bank of Kansas City, told NPR's Planet Money that the disparity was due in part to a long-standing mistrust of financial systems.

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"It has a generational impact. And that mistrust is there. Some people think the financial system just doesn't work," Bradford said on the podcast.

Host Adrian Ma highlighted how crypto – a new currency outside of all controlled systems – and its allure of gaining financial independence with a low barrier to entry, and further bolstered by mentions of celebrities.

Related: Are Crypto and NFTs a Passing Fad?

“Retail investors, especially in black and brown communities, have been sold to the sizzle, but there is no stake there. And we are the first group to lose,” Samson Williams , a former crypto investor, said on Planet Money.

Williams told the host that he initially got excited about crypto because of the idea that digital currency could be a driver for racial equity. Now he began to lose faith.

"The day someone says this is how bitcoin or crypto solved unemployment and a living wage, so I'll take them seriously," Williams said on the podcast.

According to NPR, a recent estimate of the per capita wealth of white and black Americans found the wealth gap to be 6 to 1.

Related: Top 4 Reasons The Cryptocurrency Market Is Crashing

Jefferson Noel, 27, told the Financial Times that after a $5 purchase of bitcoin was worth $70 in 2019, he invested thousands more in other digital currencies. But the recent crash wiped out more than 20% of his investment.

"As far as I know, the black community sees crypto as a way to level the playing field and get in the game before gatekeepers stop others from participating," Noel told publication.

Meanwhile, as he researches alternatives, he is still buying crypto, he told FT.

Related: Bitcoin's crypto crash prompted this company to suspend withdrawals. Here's why