- 38% of black investors under 40 own cryptocurrency, compared to 29% of white investors under 40.
- When bitcoin’s price plummeted in June, the black community was disproportionately affected.
- Kiersten and Julien Saunders of rich & REGULAR say you can always bounce back and build wealth.
After a long bull run in 2021, bitcoin price fell 50% from $42,733 at the 2022 high to $24,109 at the time of this writing. Major crypto lenders like Voyager and Celsius have filed for bankruptcy, freezing the assets of millions of investors.
Black investors in particular are disproportionately affected by the crypto crash. 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 heavily, with 39% of black investors under 40 owning cryptocurrency compared to 29% of white investors in the same age bracket.
Kiersten and Julien Saunders, who speak directly to the black community when sharing their story of financial independence on their blog, rich & REGULAR, tell Insider, “There’s a pent-up frustration in the black community, especially among those who thought crypto was an opportunity to catch up and make sure we don’t lose another boom.”
The Saunders also point out that the economic disadvantage suffered by many black Americans makes them vulnerable targets for crypto marketing. “The idea of high-risk quick money,” they say, “is more likely to be embraced by more economically fragile people. When you’re broke or trying to catch up, you start to think that investments are supposed to look like casinos.”
For anyone needing to bounce back from their crypto losses, the Saunders have three tips for getting back on the path to building wealth.
1. Find stable and diversified sources of income
“Let’s learn from the pitfall of putting all the eggs in one basket,” Julien says, “and start creating multiple baskets that have different growth abilities. When making new investments, the couple suggests finding less volatile investments — like index funds, bonds, or real estate — to balance the volatility of your crypto holdings.
He adds, “Some people might say, ‘Well, I define diversity as 60% of that in bitcoin, 20% in Ethereum, and 20% in another coin,’ and I’m like, ‘No. I mean, really diversified and 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 12-18 month sprints,” Kiersten says. “It’s just the world we live 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 risk protection, Kiersten says, is to make sure you have a fully padded emergency fund. An emergency savings fund has three to six months of living expenses, usually held in a high-yield savings account that is easy to access in case of an emergency.
“It’s important to make sure you have a cash flow plan before making new investments because nothing is going to last forever,” she says, reminding people that there are very few guarantees in the market.
Use Insider’s calculator to see if you’re on track for a comfortable retirement by answering a few questions about yourself, your savings, and how long you plan to keep working.
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3. Choose new finance heroes
Black celebrities like Jay-Z, Snoop Dogg, and Spike Lee have endorsed cryptocurrency in the past, encouraging black communities to connect to an investment vehicle with fewer barriers to entry compared to the stock market or to real estate.
“Now is the time to ask yourself if you may have outgrown your 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 re-evaluate. Ask yourself, do I still believe this person, or this community, should be my financial role model? Just re-evaluate so that you don’t make the same mistake again.”