2 Simple Reasons why American Athletes Lost in Crypto in 2022
Jacksonville Jaguars quarterback Trevoh Lawrence lost $15.1 million, former Seattle Seahawks offensive lineman Russell Okung lost $4 million, while New York Giants running back Saquon Barkley lost $3.3 million.
These are just a notable few. A lot more money has gone down the drain in the crypto bear market courtesy of some athletes requesting to get paid in crypto. Turns out they should have accepted regular dollars instead.
I wouldn’t shed a tear for most of them. I am sure quite a number of them have good heads on their shoulders and I expect them to be well diversified and fortified financially. Plus they get paid tons.
Others I am not so sure about.
The crypto market is the wrong place to try and wing it and hope it all goes well. Getting paid in bitcoin was a popular trend in 2019 that you and I probably got into (I know I did).
But my pennies don’t compare to the amounts these athletes have been hemorrhaging due to crypto market volatility.
So before you make a crazy request to your boss, consider the risks I am about to outline.
Ground floor risk
Getting paid in Bitcoin was not well thought out. Let me explain...
As much as we improve our expert-level knowledge of crypto the truth is, this thing is still in its infancy.
If you stop to think that there are professors who have studied financial markets data going back 120 years, you realize that our crypto industry is still in the womb of its potential.
120 years' worth of data tells you what could reoccur and gives you playback ability that will help you predict how investors are likely to behave should certain circumstances present themselves all over again.
12 years' worth of new data doesn't give you much.
All you have is a chart full of swing highs and lows and some Katy Perry background music that takes you back to summer 09.
#PaymeinBitcoin was a trend that shouldn’t have been taken that seriously.
If the idea of a $20 per hour job turning into a $14 per hour job in BTC almost overnight would piss you off, imagine taking millions of dollars worth of unconscious pay cuts due to BTC fluctuations.
Of course, it’s a party when BTC prices start to rally, but you shouldn’t be the type to play Russian roulette with your wages.
We are still on the ground floor of this crypto industry and the paint is still wet, the roof is still fragile and the stairs need to be remodelled. It will take some time before BTC can offer you the stability you get with more seasoned assets.
Until then, you need to calculate your moves and stop the bleeding in your portfolio.
2. Financial Contagion
The crypto markets and traditional markets have all been getting hammered, in what Professor Andrew Karolyi of Cornell University would refer to as financial contagion.
To break it down in simple terms, financial woes spread just like infections spread.
What we saw with COVID-19 is that the degree of spread is dependent on whether you have proper social distancing, proper sanitizing, and mask-wearing. The concept of financial contagion suggests that the same is the case with financial systems but not literally.
When financial systems are interconnected, they are likely to all catch whatever kind of sneeze one of them is experiencing. You saw this happen to traditional sectors and markets with the production sector crippling logistics and logistics crippling the rest of the global supply chain.
The crypto industry has been going through radioactive contagion. With the downturn in the stock market, cryptos have seen stunning losses. The “I’m going to keep my money in crypto to hedge against a failing dollar” movement hasn’t had any momentum post-2019.
If any of the athletes knew any of this, then it was seriously misguided to continue getting paid and keeping their large sums in BTC.
You should love cryptos and the crypto community as much as we all do. You should also champion it and be excited about it as we all are. That must come with some reality checks though.
The most painful reality check is that crypto is the most marginalized industry in existence right now. It is the “last hired, fast fired” of the financial world.
This means that whatever peril befalls the global financial system, the crypto industry will probably feel the most heat as a result.
This could change with time as the industry grows and bad sentiment dies off. For all we know, getting paid in BTC may suck now but could be the norm in a decade.
We are still on the ground floor of the crypto revolution. Pegging a huge chunk of your financial future on crypto is a bet you can’t afford to lose. The global financial industry is going through turbulence and that precipitates dangerous volatility in the crypto markets.
But there’s hope.
The crypto industry, hate or like it is here to stay. The best crypto projects will definitely gain in value in the coming months and years. In a few years, getting paid in BTC may not be as risky as it is right now.
It could be the future normal.
Keep up to date on cryptos by following our YouTuber Jordan.