AAthletes and other public figures who were keen on getting paid in bitcoins are feeling the pain as the value of cryptocurrencies plummets.
At its peak last year, bitcoin, the flagship cryptocurrency, was at $69,000. It has since crashed, with bitcoin now trading at just over $20,000, a whopping 70% drop over the past few months.
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Last year, as bitcoin and other cryptocurrencies skyrocketed and gained more institutional acceptance, celebrities, politicians, and especially athletes started jumping on the cryptocurrency bandwagon. Their public endorsements of the asset class may have encouraged others to invest – but now their holdings are in the gutter.
For example, New York Giants running back Saquon Barkley, who signed with the Giants in 2018, earns more than $10 million a year in endorsement, marketing and endorsement deals. He said the funds would go in bitcoin instead of his bank account.
There are a lot of unknown variables trying to calculate how much some of these athletes and public figures have lost in their investments. For one thing, it’s unclear if any of them cashed in and put those funds into more traditional asset classes and, if so, when they did.
If Barkley had taken all of his $10 million in endorsement, marketing, and endorsement deals and invested it in bitcoin in mid-July, around the time the announcement was made, he would have suffered a heavy loss. He was worth around $33,000 then, so his $10 million investment would now be worth just over $6 million.
Then again, if Barkley had decided to sell his bitcoin stash when the market was at its peak, he would have made a pretty good return on his investment. If the running back had cashed in in November, his total investment would have been worth nearly $21 million, an incredible 110% increase in just four months.
Los Angeles Rams wide receiver Odell Beckham Jr. announced in November that through a partnership with payment service Cash App, he would take his NFL salary in bitcoin. The one-year contract would have a maximum value of $4.25 million, with a base salary of $750,000.
While there are a lot of caveats and unknowns with Beckham’s payment and cryptocurrency investment status, if one were to assume that he even keeps his $750 base salary $000 would be a big dive.
When he signed with the Rams, bitcoin was approaching all-time highs at around $64,000. On Monday, his base salary of $750,000 would only be worth about $234,000 if he traded it for cash today, a drop in value of almost 70%.
Eloisa Marchesoni, a cryptocurrency consultant, said she expects the trend of athletes receiving bonuses or paying in bitcoin to stop. During the downturn, they might instead turn to more stable forms of investment, such as fiat currency, watches, and real estate.
And we may have to wait until this trend returns. Marchesoni suggested that it could take years rather than months before bitcoin rebounds and begins to break above the high of $69,000 hit in November.
“In this middle frame, I think we’re not going to see any other athletes accepting crypto compensation,” she said, though she added that some of the highest paid and more established athletes who have the capital to invest while the markets are down might see the benefit of the downturn and buy cryptocurrency in hopes of making a profit down the road.
It’s not just athletes who have taken a hit for tying some of their income streams to the cryptocurrency roller coaster.
After Miami Mayor Francis Suarez announced he would take his next “100% bitcoin” paycheck, newly elected New York City Mayor Eric Adams walked past him and said he would take his first three paychecks in the form of a mix of bitcoin and ethereum.
While the exact relationship between bitcoin and ethereum is unclear, if his first three checks of $5,900 every two weeks were only converted to bitcoin, his investment would be down today. If he had just cashed the three checks, they would have totaled about $17,700. Based on the approximate timing of when it would have been paid, this investment may now have decreased in value to just over $9,000.
Nayib Bukele, the technocratic president of El Salvador, went much further. He paved the way for his country to become the first in the world to declare bitcoin legal tender and filled government coffers with investments in digital assets.
Bukele has announced several bitcoin purchases over the past few months, often announcing on Twitter that his country is “buying the dip”. The problem was that the drop was only getting deeper, and bitcoin investment from El Salvador is now below $53 million, down from over $100 million.
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Some economists predict that the loss of interest and investment in cryptocurrency is a sign that it is collapsing.
But others, including Marchesoni, said it was not a dying asset class and another bull run was on the way – although she said it could be in a year or two.
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