The slump in cryptocurrency markets has called into question a trend that peaked alongside its price: receiving payments in digital assets.
Celebrities and other public figures flaunted their plans to receive payments in cryptocurrencies. But the value of major currencies has plummeted this year, leaving those payments worth less in dollar terms.
Eric Adams, Mayor of New York City, was among the recipients. After taking office in January, said that your first three paychecks would be “automatically converted” to ethereum and bitcoin through Coinbase, the cryptocurrency trading platform.
Your first biweekly payment, worth $9,925 before taxes in dollar terms, was deposited on January 21.
Since that date, the dollar values of bitcoin and ethereum have fallen by 20% and 29%, respectively. If it is divided equally between the two CRYPTOCURRENCIESAdams’ first paycheck would now be worth $7,416.
Adams was undeterred and compared the volatility of cryptocurrencies to the stock market. “People who look at bitcoin and say, ‘Okay, it’s down.’ Well, what stocks haven’t gone down? he said he in a recent interview with the Financial Times, referring to parallel weakness in stocks this year.
He added that he has no regrets or doubts about his decision to be paid in cryptocurrency, a move meant to demonstrate the city’s commitment to the fledgling industry.
“I lost about a hundred-odd thousand dollars when the stock market crashed out of my 401(k),” Adams said. “We know that it goes up and down. Bitcoin is here to stay, and most of the investment is here at New York.”
Athletes, including NFL player Aaron Rogers and Nascar driver Landon Cassill, have agreed in recent months to receive at least some payment in digital currencies.
Trevor Lawrence, the quarterback for the Jacksonville Jaguars NFL football team, agreed to receive his $22.6 million signing bonus in cryptocurrency. If he held it in bitcoin, he would now have just $9.8 million, according to an analysis by sports betting data firm The Action Network.
Adams and Rogers announced their salary moves to bitcoin in November, when the token was near its all-time high of $64,500. But the volatility of the asset means that it can also quickly lose a significant portion of its value. On Friday, bitcoin was down 2.4 percent at $29,478, giving it a total market value of $561 billion, according to exchange Coinbase.
Celebrity support for cryptocurrencies has helped popularize volatile assets. In January, half of Americans said they would be interested in receiving at least 10 percent of their salary in cryptocurrency, according to a January survey by cryptocurrency exchange Voyager.
“Honestly, if we had had this conversation two years ago, I would have said it was a brilliant idea. Why wouldn’t you want your salary in crypto? All it does is go up,” said Mark Freebairn, who leads CFO recruitment at London-based executive search group Odgers Berndtson. “Now I would say that was idiotic.”