3 steps to take if you lose everything in a crypto crash

  • 38% of black investors under the age of 40 own cryptocurrency, compared to 29% of white investors under the age of 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 recover and build wealth.

After a long rally in 2021, the bitcoin price is down 50% from $42,733 at the top of 2022 to $24,109 at the time of writing. Major cryptocurrency lenders such as Voyager and Celsius has filed for bankruptcyand freezing the assets of millions of investors.

Black investors in particular are disproportionately affected by the cryptocurrency crash. According to the study Ariel Investments, 25% of black Americans own cryptocurrency compared to only 15% of white Americans. Young people are investing 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 directly address the black community when sharing the story of their financial independence on their blog, rich and ordinaryHe told Insider, “There is pent-up frustration in the Black community, especially among those who felt that cryptocurrency was an opportunity to catch up and make sure we didn’t miss out on another boom.”

Saunderses also points out that the economic disadvantage that many black Americans suffer from makes them poor targets for cryptocurrency marketing. “The idea of ​​fast money with high risk,” they say, is more likely to be embraced by the most economically vulnerable. When you fall apart, or try to catch up, you start to think that casinos are supposed to feel like investments.”

For anyone who needs to recover from cryptocurrency losses, Saunderses has three tips for getting back on the wealth-building path.

1. Finding stable and diversified sources of income

“Let’s learn from the predicament of putting all eggs in one basket, and let’s start creating multiple baskets that have a different ability to grow,” Julian says. When making new investments, the couple suggests finding investments that are less volatile – like index fundsAnd the bondsor Real estate To balance the fluctuations of your crypto holdings.

He adds, “Some people might say, ‘Well, I define diversity as 60% of it in Bitcoin, 20% in Ethereum, 20% in another currency,’ and I’m like, ‘No, I mean, truly Diverse and less volatile assets.

2. Plan for volatility by having a sound emergency fund

“At this point, even in the stock market, you need to plan for swings in 12 to 18 month periods,” Kiersten says. “This is the world we are in now.” It specifically suggests running numbers for worst-case scenarios when deciding whether or not to invest in a new asset.

The best risk hedge protection, Kiersten says, is to make sure you have a fully-lined emergency fund. that emergency provident fund It has the equivalent of three to six months of living expenses, and is usually kept in ahHigh Return Savings Account Easily accessible during emergencies.

“Make sure you have a cash flow plan before you make new investments is important, because nothing will go up forever,” she says, reminding people that there is very little collateral in the market.

retirement calculator
Use the Insider Calculator to see if you’re on your way to a comfortable retirement by answering a few questions about yourself, your savings, and how long you expect to keep working.

you will You have Around

1725,000 dollars

you will need to Around

$2,940,000

*Based on the need to cover 70% of your annual pre-retirement income and a life expectancy of 100 years.

3. Choosing new money champions

Black celebrities like Jay-Z, Snoop Dogg and Spike Lee have endorsed cryptocurrency in the past, encouraging black communities to sign into an investment vehicle with lower barriers to entry than the stock market or real estate.

“It’s time to ask yourself if you’ve outgrown your financial champ,” Kiersten says. The Saunders often teach societies the concept of “hidden wealth,” the idea that building wealth doesn’t need to be flashy or excessive.

Says Kiersten, “Any time you lose money in the market is an opportunity to re-evaluate. Ask yourself, Do I still think this person, or this society, should be my financial model? Same mistake again.”