How the crypto crash brought bad karma to a New York yoga studio – Financial Times

New Vibe Yoga in New York’s East Village is a nearly perfect yoga studio. The smell of peppermint and eucalyptus bathes the top-floor practice room, with its exposed brick walls and crackling wood fire, in a warm and tranquil haze. But even as its owner, Alex Schatzberg, has created a relaxing haven for his clientele, he himself is wrestling with financial anxiety.

The number of mats slapping down on the hardwood floors is barely enough to keep Schatzberg’s business afloat. And in the past year the lower Manhattan studio has suffered a financial blow from an unlikely source: the crypto crash.

“Crypto was like my life raft . . . and their party is over,” Schatzberg told me when I visited the studio during a recent reporting trip to New York. The incidental disclosure that I write about crypto prompted him to launch into a 30-minute story that showed just how far the unlikely ripples of the crash in digital tokens have spread.

The first casualties of the crypto industry meltdown were the millions of investors who ploughed their money into digital assets, as well as the former crypto titans themselves, whose fortunes were wiped out overnight. But an eclectic range of businesses that prospered during crypto’s ascendancy — from Miami nightclubs to Bahamas luxury hotels — are also suffering from the contraction.

Schatzberg’s yoga studio, which opened in its current location in 2017, is just one part of his business which occupies three floors of a townhouse on St Marks Place — described by writer Ada Calhoun as “the hippest street in America”. He also lets bedrooms on Airbnb and offers larger rooms for event bookings. While yogis were slow to return to in-person classes after the pandemic, the Airbnb became the mainstay of Schatzberg’s revenue, thanks to the popularity of his space with a new group of cash-rich travellers.

Cryptocurrencies values boomed ten-fold from the onset of Covid to their peak in November 2021, giving many traders a temporary flush of wealth. Most of Schatzberg’s bookings were from those in the crypto industry. “I was priced really high,” he said. “They were the people who had the money.”

The New-Age atmosphere and the opportunity for a few quick stretches between trades appealed to this clientele, and demand grew among crypto devotees visiting the city for work or digital asset conferences — which were held in person even during the pandemic. Predominately young and newly wealthy, they would practise yoga and then spend their days in the downstairs rooms doing deals or watching YouTube videos about token trading, Schatzberg recalls.

But the boom did not last long. Beginning last May, the crypto sector suffered a series of blow ups, and much of its apparent wealth evaporated as quickly as it had appeared. The total value of digital currencies has fallen by around two-thirds from its peak.

Financial analysts blame the fall in crypto on the same fundamental shift in the global economic order that has afflicted other relatively speculative corners of financial markets, such as big tech. To battle runaway inflation, central banks have sharply reversed a decade of easy monetary policy, making the cost of borrowing the most expensive in more than a decade. Many companies are feeling the pinch.

As the tide of easy money has retreated, and bookings have dried up, Schatzberg has fallen back on the yoga business — but with fewer office workers now making the journey into Manhattan, attendance is still at just a quarter of pre-pandemic levels. Like other service and hospitality businesses in New York that thrived on office workers, Schatzberg is facing a slow and partial recovery from Covid alongside rising costs and the curveball of the crypto collapse.

But against a background of devotional songs and Indian flute music wafting from the studio speakers, Schatzberg insists he’ll find a way to survive the financial pressure and return to profit. For that, he’s relying on a currency far more tangible than the ones traded by his former clients. “New York runs on the dollar,” he says. “If you’re not hustling, then get out.” 

joshua.oliver@ft.com