How Cryptocurrency’s Volatility is Fueling Philanthropy

by | Jul 18, 2022

Crypto markets saw steep price declines in the first half of 2022. Should nonprofits worry about cryptocurrency donation volume this year? We’re breaking down what organizations need to know about cryptocurrency’s market volatility and how it can inform their plans for crypto fundraising.

Crypto Bear and Bull Markets: What’s the Difference?

Market corrections are a normal part of traditional investing, and cryptocurrency markets are no different in that regard. Following a significant bull market that sees crypto prices rising, the market tends to sustain a period of price declines. This is known as a bear market.

Because crypto is a relatively new asset class, many cryptocurrencies experience dramatic price volatility during these correction periods.

New investors—especially in crypto—tend to experience fear during a market correction. Many of these individuals buy crypto assets “at the top,” and then see their investments decline in value.

On the other hand, more experienced investors understand these patterns and do their best to make investment decisions based on these inevitable changes in the market. In economies around the world, markets go through cycles of booms and busts. Markets (not just crypto) are down right now, but that’s because we’re seeing signs of a recession across the entire economy. Crypto is uniquely well positioned in these circumstances.

Crypto Markets and Donation Volume

When crypto’s most recent bull market hit its peak in 2021, most crypto prices were way up. Many assets hit new all-time highs, including major cryptos like Bitcoin and Ethereum. The global crypto market cap reached $3 Trillion in November 2021.

During this period, crypto portfolios saw significant increases for new and experienced crypto investors. Experiencing this overall confidence in the market, crypto users are often quick to make donations to nonprofits.

But while nonprofit donation volume is high during bull markets, so are the number of nonprofits actively fundraising. As a result, competition is often greater and donor stewardship is overall less effective.

On the other hand, bear markets present a different kind of opportunity for nonprofits fundraising in the crypto space.

Donation volume may not be quite as heavy as in prior seasons. But keep in mind that many crypto investors—especially those who have several years of experience in these volatile markets—are still “up” in the long run.

Nonprofits Should See Bear Markets As Opportunities

Ignore the dozens of alarming news headlines. A market correction does not mean that “Bitcoin is dead.” Far from it, in fact. Crypto markets have rebounded from bear markets time and again, each time coming back stronger than ever before.

Experienced investors won’t give up on crypto because of a market correction. Bitcoin is, after all, the best-performing asset of the past decade—even with its dramatic price volatility. In fact, many investors view correction periods as an opportunity to reinvest in crypto assets at lower prices.

And with over 300 million users, global crypto adoption is still growing at an exponential rate, on pace to reach nearly 1 billion by the end of 2022.

Crypto Donations Won’t Dry Up in a Bear Market

A bear market does not mean that crypto investors will stop donating to their favorite causes. Since late February 2022, for example, Ukraine has received more than $100M in cryptocurrency donations.

However, gifts during a bear market may come more slowly, as donors aren’t as certain what will happen with the market through the rest of the year. As they watch market trends, they are likely asking themselves questions like: Will the market continue its downward trend, or will it reverse? Should I reinvest now, or wait to see if the prices go lower?

As is the case with traditional donors, crypto donors also like to make donations during the year-end fundraising season.

So while you can still expect to receive donations in the later months of the year, the earlier months are an ideal time to consistently communicate your message, or even experiment with new fundraising approaches.

How to Fundraise in a Crypto Bear Market

Asking for donations from your supporters is hard—asking potential donors you’ve never met is even harder. But during bear markets, nonprofits have a golden opportunity to build genuine relationships with potential supporters. Doing so is less realistic during bull market conditions, when fundraising is most competitive and donors are eager to donate more readily.

Because it’s the perfect time to deepen connections with potential supporters, we outlined a few ways to capture the attention of crypto donors in a bear market:

  1. Change how you ask for crypto donations. Instead of saying “donate your appreciated crypto,” try a different approach that emphasizes the impact of a small donation.
  2. Engage with the NFT community. Despite the bear market, NFT sales have not slowed down. NFT-related charitable giving was one of the top drivers of Crypto Philanthropy in 2021, responsible for over $12.3 Million in donations. Read our exclusive report, The Rise of NFT Fundraising, to learn how to tap into this generous community.
  3. Grow your base of supporters. Have your team join Discord channels and engage with “Crypto Twitter.” Post on social media regularly to communicate the impact of crypto donations in the past and the importance of your work.
  4. Turn your donors into ambassadors. Your current supporters are your best spokespeople. To get the attention of the crypto community, host Twitter Spaces with past donors to talk about the impact of crypto, and why your organization decided to accept crypto donations.

Adopt a Growth Mindset During Crypto Bear Markets

While crypto markets take a bad rap in the news, remember that many investors reinvest during downturns so that they can enjoy greater returns on their investments later.

Nonprofits can use this time in a similar way by nurturing their relationships in the crypto, NFT and web3 spaces. By practicing good donor stewardship now, you’ll have more donors interested in supporting your mission later.

Take advantage of this bear market with a limited-time offer from The Giving Block. Nonprofits that sign up today can get their first crypto donations matched up to $3,750.

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