Athletes and other public figures who made a point of being paid in bitcoin are feeling the pain as cryptocurrencies plummet in value.
At its peak last year, bitcoin, the flagship cryptocurrency, was at $69,000. It has since slumped badly, with one bitcoin now trading at just over $20,000 — a whopping 70% decline just over the past few months.
BITCOIN CRASH WIPES OUT EL SALVADOR’S CRYPTOCURRENCY RESERVES
Last year, as bitcoin and other cryptocurrencies soared and gained more institutional acceptance, celebrities, politicians, and especially athletes began to jump 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 instance, New York Giants running back Saquon Barkley, who signed with the Giants in 2018, makes more than $10 million per year in endorsements, marketing, and sponsorship deals. He said the funds would be going into bitcoin instead of his bank account.
There are a lot of unknown variables in trying to calculate how much some of these athletes and public figures lost in their investments. For one, it is unclear if some of them have cashed out and parked those funds in more traditional asset classes and, if so, when they did.
If Barkley took the entirety of his $10 million in endorsements, marketing, and sponsorship deals and invested it in bitcoin in mid-July, around the time the announcement was made, he would have taken a hefty loss. It was worth about $33,000 then, so his $10 million investment would now be worth just over $6 million.
Then again, if Barkley decided to sell his bitcoin stash when the market was at its zenith, he would have made quite a good return on investment. If the running back would have cashed out in November, his total investment would have been worth nearly $21 million, an incredible 110% increase in just a matter of four months.
Odell Beckham Jr., a wide receiver for the Los Angeles Rams, announced in November that in a partnership with the payment service Cash App he would take his salary with the NFL in bitcoin. The one-year contract is reportedly worth up to $4.25 million, with a base salary of $750,000.
While there are a lot of caveats and unknowns with Beckham’s payout and cryptocurrency investment status, if one were to assume he is still holding on to even just his base salary of $750,000 it would represent a big plunge.
When he signed with the Rams, bitcoin was nearing all-time highs at about $64,000. As of Monday, his base salary of $750,000 would only be worth about $234,000 if he exchanged it for cash today — a drop in value of nearly 70%.
Eloisa Marchesoni, a cryptocurrency consultant, said she expects the trend of athletes receiving bonuses or pay in bitcoin to halt. During the downturn, they might instead turn to more stable forms of investment, such as fiat currency, watches, and real estate.
And it might be quite the wait until that trend returns. Marchesoni suggested that it could be a matter of years rather than months before bitcoin rebounds and begins punching above the $69,000 high it hit in November.
“In that in-between frame, I believe that we’re not going to see other athletes actually agreeing to a crypto compensation,” she said, although she added that some of the higher-paid and more well-established athletes who have the capital to invest while the markets are down could see the upside to the slowdown and buy some cryptocurrency in hopes of turning 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 that he would take his next paycheck “100% in bitcoin,” newly elected New York Mayor Eric Adams one-upped him and said he would take his first three paychecks as a mix of bitcoin and ethereum.
While the exact ratio of bitcoin to ethereum is unclear, if his first three biweekly $5,900 checks were converted only into bitcoin, his investment would be down today. Had he just cashed the three checks, they would have totaled about $17,700. Based on the rough timing of when he would have been paid, that investment might now have dwindled in value to just over $9,000.
Nayib Bukele, the technocratic president of El Salvador, took it much further. He paved the way for his country to become the first in the world to declare bitcoin legal tender and filled the government coffers with investments in the digital assets.
Bukele announced several purchases of bitcoins over the past several months, often announcing on Twitter that his country was “buying the dip.” The problem was that the dip just kept getting deeper, and El Salvador’s bitcoin investment is now at less than $53 million, down from more than $100 million.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Some economists predict that the loss of interest and investment in cryptocurrency is a sign that it is falling apart.
But others, including Marchesoni, said it is not a dying asset class and that another bull run is in store — although she said that could be a year or two from now.