CBx Daily

Why Black Investors Seemingly Prefer Cryptocurrencies Over Traditional Stocks

Aug 10

By CultureBanx Team

  • 30% of Black and 27% of Hispanic investors own cryptocurrencies
  • 44% of cryptocurrency traders are investors of color, compared with only 35% stock investors

A new generation of Black financial enthusiasts are emerging with 44% of cryptocurrency traders being investors of color, compared with only 35% stock investors. A study from the NORC at the University of Chicago found these crypto traders are younger and more diverse in terms of race, ethnicity and gender, due to financial inclusion, along with the democratization of global economics that's attracting a wide variety of people. Could cryptocurrencies finally be the way for African Americans to take our financial fortitude back, by letting it become our economic empowerment language?

Why This Matters: Black Americans need to make big moves to make up for stolen financial time. Institutional policies ranging from Jim Crow segregation to modern-day redlining have disenfranchised Black people from building generational wealth. In fact, Black people hold just 3.8% of $116 trillion in wealth in the U.S., according to data from the Federal Reserve.

Data shows that while fewer Black Americans invest in stocks than white people, they are actually more receptive to holding cryptocurrencies. A recent Harris Poll survey found that in the U.S., 30% of Black and 27% Hispanic investors own cryptocurrencies, compared with just 17% of White investors. Perhaps crypto’s main appeal to underrepresented groups is that it’s viewed as the more accessible financial investing option.

“Cryptocurrencies are opening up investing opportunities for more diverse investors, which is a very good thing,” says Angela Fontes, a vice president in the Economics, Justice, and Society department at NORC at the University of Chicago. “In crypto, there’s a lot more information at the basic level because it’s not at the same maturity as traditional stock investing is.”

Investor Travis Kling echoed a similar sentiment and specifically defined Bitcoin as a “non-sovereign, hard-capped supply, global, immutable, decentralized, digital store of value. This only further reiterates cryptocurrencies mass appeal to underrepresented investors. Typically, 26% of crypto investors get their information mostly through the crypto exchanges themselves, 25% receive their information from general trading platforms like Fidelity or Robinhood (HOOD +3.96%), and 24% rely on social media for their information.

There’s a solid argument for why cryptocurrencies are more popular among Black investors, even with their immense volatility at times. Author of Bitcoin & Black America, Isaiah Jackson wrote that by continuing to deposit money into banks, Black people continue to feed a system that does not have our best interests at heart.

With Black women as the fastest-growing demographic of entrepreneurs in the U.S., 50% of the Black population are millennials or younger, and HBCUs produce 27% of Black students with bachelor’s degrees in STEM fields, there will be even more people coming into money and ready to invest. Let’s not forget that the Black spending power is $1.4 trillion according the the Selig Center, and by the year 2044, people of color will become the majority in the U.S., making up over half of the U.S. population. It’s important to pay attention to how and why they prefer to invest in cryptocurrencies.

Situational Awareness: Cryptocurrencies have had a wild year, with bitcoin hitting an all-time high above $63,000 in April. Investing in assets such as equities and Bitcoin can be risky, and several studies have shown that stock picking fails to beat the broader market over the long run, even when done by finance-industry professionals.

CBx Vibe:Investments” Nickoe