The fall in cryptocurrency markets challenged a trend that culminated in its price: getting paid in digital assets.
Celebrities and other public figures have posted their intention to receive payment in crypto. But the value of major coins has fallen this year, leaving those payouts to weigh less in dollars.
Eric Adams, Mayor of New York, was among the recipients. After taking office in January, he said his first three paychecks would be “automatically converted” to ethereum and bitcoin through Coinbase, the crypto trading platform.
His first bi-weekly payment, worth $9,925 in pre-tax dollars, was deposited Jan. 21.
Since that date, the dollar values of bitcoin and ethereum have fallen by 20% and 29%, respectively. If split equally between the two cryptocurrencies, Adams’ first paycheck would now be worth $7,416.
Adams was undeterred, comparing crypto volatility with the stock market. “People who look at bitcoin and say, ‘OK, it’s dropped.’ Well, what stocks haven’t gone down?” he said in a recent Financial Times interview, referring to the parallel weakness in shares this year.
He added that he had no regrets or ulterior motives about his decision to be paid in crypto, a move meant to demonstrate the city’s commitment to the fledgling industry.
“I lost about a hundred thousand dollars when the stock market crashed on my 401(k),” Adams said. “We know it goes up and down. Bitcoin is here to stay, and most of the investment is here in New York.
Athletes including NFL player Aaron Rogers and Nascar driver Landon Cassill have all agreed in recent months to receive at least digital currency compensation.
Jacksonville Jaguars NFL football team quarterback Trevor Lawrence has agreed to receive his $22.6 million signing bonus in cryptocurrency. If he held it in bitcoin, he would be down to just $9.8 million, according to analysis by sports betting data firm, The Action Network.
Adams and Rogers announced that their salary would switch to bitcoin in November, when the token was close to its all-time high of $64,500. But the volatility of the asset means that it can also lose a significant portion of its value quickly. On Friday, bitcoin was down 2.4% at $29,478, giving it a total market value of $561 billion, according to exchange Coinbase.
Celebrity endorsement of cryptocurrencies has helped popularize volatile assets. In January, half of Americans said they would be interested in receiving at least 10% of their salary in crypto, 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 to be in crypto? All it does is go up “, said Mark Freebairn, who leads CFO recruitment at executive search group Odgers Berndtson in London. “Now I would say that was silly.