Is Crypto the NBA’s real MVP?
A look at the power sports marketing may have on investor trends and demographics.
By Clint Cowles, Senior Manager, Institutional Trading
Although the gap is narrowing, the percentage of people with investments, traditional or not, is still higher among white Americans than Black Americans. But if we look more specifically at what types of investments as well as age demographics, there are some very interesting trends emerging that lead to an interesting question: Is the NBA making an impact on new generations of investors?
Investing differences by demographic
First, let’s look at some of the stats from the Ariel-Schwab 2022 Black Investor Survey conducted earlier this year.
Since the survey was first conducted in 1998, the gap between share of white Americans and Black Americans investing in stocks has generally spanned 15 to 20 percentage points, with white Americans always investing more. But in 2022, that gap fell to just five points.
Now let’s take a closer look at the age ranges of these investors.
In 2022, the survey found:
Among white Americans, 57% under age 40 are invested, compared to 66% of those over 60.
But among Black Americans, the reverse was true—68% of people under 40 said they are invested versus 50% of those over 60.
So, what does this mean?
There are a couple explanations for this, one being the level of discussion about investing in the home at younger ages.
Black investors are increasingly learning about investing at a younger age. Seventy-five percent of Black Americans under age 40 were introduced to investing before they turned 30 – this is a significant change from what past surveys have revealed. Another explanation revolves around the growth of new products to invest in, specifically cryptocurrencies.
What’s driving more Black Americans to invest?
Data suggests the increasing availability, and promotion, of cryptocurrency may be playing a role:
25% of Black investors currently own cryptocurrency, and among Black investors under 40, that number jumps to 38%. Only 15% of all white investors own cryptocurrency, and just 29% who are under 40 own it.
Looking at the reasons people started investing in the first place, excitement about cryptocurrency was the spark:
23% of Black investors said the excitement about cryptocurrency was what made them interested in investing and 11% said it was their first investment. This came out to less than half that for white investors at 10% and 4%.
When asked what they thought the best investment choice overall was, Black investors again doubled white investors with 8% versus 4% voting for cryptocurrency.
Survey data shows Black investors are more interested in cryptocurrencies than white investors, but why is that?
One explanation is a lack of trust in traditional financial institutions and the stock market in general—and less aversion to the risks of cryptocurrencies.
Only 48% of Black Americans perceive the stock market as offering a fair opportunity for all, which is an improvement from 40% just two years ago.
Of those Black Americans who are not invested or have pulled out, 36% say they don’t trust the stock market and 25% say they don’t trust financial institutions. Both of which are higher than white Americans in the same situation, 29% and 19% respectively.
And, perhaps more alarmingly, Black investors said they are less likely than white investors to see cryptocurrency as risky (68% vs. 73%), and more likely to believe it is safe (33% vs. 18%).
One driver of the attraction to cryptocurrency despite its risks, could be the outsized amount of promotion of it from the NBA itself as well as from some of the biggest names within it.
According to recent data, 12.4% of the U.S. population identify as Black individuals. When NBA fans were asked, 27% of responders identified as Black individuals, making it the most popular sport among the Black community nationwide.
It then makes to consider the role that the NBA and its stars’ promotion of cryptocurrencies are impacting how the Black community views that type of investment.
Big names in NBA that are boosting the crypto craze
Crypto.com and FTX, a cryptocurrency exchange, have recently bought naming rights to NBA arenas in Los Angeles and Miami and several superstars including LeBron James, Steph Curry and Kevin Durant have signed on as official endorsers. Jimmy Butler partnered with Binance, another crypto exchange, and Andre Iguodala partnered with an investment app to convert some of his salary into Bitcoin. It’s certainly gaining in popularity in recent years, but some players like Spencer Dinwiddie have been hyping cryptocurrencies as far back as 2017.
The most prominent endorsement however may have come from the GOAT himself, Michael Jordan and his son Jeffrey. They recently announced a token called HEIR built on the Solana blockchain that will engage fans further by allowing them to join a “huddle” and be invested with their favorite players.
And although there have been endorsements from other sports stars, none have come close to the adoption from the NBA. There are obviously a multitude of factors playing into the excitement about crypto from the Black community, but it’s reasonable to believe the NBA may be a major contributor.
ViewpointsPut your phone down and go to sleep
New research shows social media scrolling before bed can hurt your sleep quality. So even if you log 8 hours of ZZZ's, you might not feel rested.
Culture, ViewpointsWhat it takes to become a leader
Charles Schwab CEO Walt Bettinger gives advice to the next generation of talent on how to develop and advance in their careers.
Industry, ViewpointsHow financial literacy can help solve our biggest social issues
Carrie Schwab-Pomerantz highlights the importance of financial literacy today and why she sees her recent appointment as board chair for Boys & Girls Clubs of America as an important blueprint to propel change in other areas.