Russell Okung’s bitcoin salary could spur more professional athletes to invest

Often referred to as a new form of gold, now Carolina Panthers’ offensive linemen Russell Okung is making a huge bet on bitcoin.

After a struggle of almost two years, Okung finally got his wish fulfilled and his salary will be diverted to the purchase of bitcoin with the help of mobile payment company Strike. The National Football League and its players’ union have approved the agreement that will allow the Panthers to pay a portion of Okung’s $ 13 million salary to Strike so that it can be converted into bitcoin.

“Money is more than currency; it is power,” Okung said in a statement. “The way money is handled from creation to distribution is part of that power. Getting paid in bitcoin is the first step in getting out of the corrupt, manipulated economy that we all inhabit.”

To be clear, the Panthers do not pay Okung directly in bitcoin. Instead, the team will channel about $ 6.5 million of Okung’s salary into the strike, which will then presumably charge fees and process bitcoin transactions for Okung, a longtime proponent of the currency.

Strike did not respond to a request from CNBC to confirm the transaction costs associated with Okung’s agreement.

Bitcoin is trading at over $ 27,000, so Okung will receive around 240 coins at that value. Since playing with the Los Angeles Chargers in 2019, Okung has lobbied to replace his salary with bitcoin.

“He hopes in the long run that bitcoin’s price will go up,” Chris Matta, co-founder of Crescent Crypto Asset Management, told CNBC on Tuesday. “And this move is a show of his support and long-term optimism for bitcoin that grows even more from here.”

Bitcoin was introduced in 2008 and last year made fortunes for some when a single bitcoin soared from less than $ 1,000 to nearly $ 20,000. That led to a bull market in new cryptocurrency-based funds.

Bitcoin has since gained popularity with Covid-19’s disruptive economies as investors seek safety during the pandemic. Gold was the usual safety net for investors for decades, but Matta said bitcoin is now seen as an alternative.

“It has become hugely attractive as a hard asset, especially during Covid-19 and all of the consumer concerns about the global economy and geopolitical environment,” Matta said, referring to billionaire hedge fund manager Paul Tudor Jones’s comments on investing more in bitcoin.

“The new digital gold, as it is called,” added Matta. “It has brought bitcoin to the forefront of investment portfolios this year and has attracted a lot of interest.”

Matta said Okung’s bitcoin would likely be placed in offline digital wallets called “ cold storage. ” The move gives Okung more protection against potential hackers looking to steal the currency from his account. Bitcoin accounts are not protected like bank accounts, which are FDIC insured.

“Keeping it offline is a much safer way, especially for someone like Russ who is open about bitcoin,” Matta said. “Anyone who is vocal in the bitcoin space is a target for cyber hacking.”

But like any investment, Okung, 32, takes significant risk.

Drew Hawkins, the CEO of Edyoucore, a financial advisory firm, said the frequent fraudulent activity around bitcoin is a concern, adding, “A lot of guys need to understand what it is and how it works and what it isn’t.

“It’s a risk in terms of what they will get their hands on with guaranteed dollars from a contract versus taking risks in terms of what this value of bitcoin will or will not be,” Hawkins said.

Although it is nearing new highs, volatility still haunts bitcoin due to its steep correction history, which saw the trading price drop to $ 3,000 for a single coin in 2017.

On Monday, Mark Newton of Newton Advisors told CNBC’s “Trading Nation” that his estimates show bitcoin’s current cycle will “peak in early January.” He said there could be opportunities to buy bitcoin at lower prices by then.

“Bitcoin has been an extremely volatile asset,” Matta said. “But in the longer term, it’s probably the best performing asset of the last 10 years. But if you don’t know what you’re doing and don’t invest in this thing long term, there will be a lot of volatility in between.”

Hawkins added, “People have done well and made a lot of money out of it, but you’ve also had just as many situations that didn’t turn out what anyone expected or ended up with significant losses.”

Strike is also coordinating more schemes emulating Okung’s with players from the Brooklyn Nets and New York Yankees, according to bitcoin news site CoinDesk. The site did not name the players involved.

Matta said Okung’s move would provide more credibility for bitcoin, and that could lead even more athletes to invest in digital currency. Potential investors can also buy bitcoin through other mobile payment apps, including PayPal, Cash App and Square.

“Covid-19 has hypercharged the growth of bitcoin,” Matta said. “I think this would have happened with bitcoin anyway; it may have taken a few more years to get to this point.”

–CNBC’s Hugh Son contributed to this report.