Several crypto businesses have recently announced significant layoffs as the crypto market downturns started hitting bottom lines.
The largest U.S.-based crypto exchange Coinbase announced Wednesday it is extending its hiring break and rescinding accepted offers, while fellow U.S. exchange Gemini announced on Thursday the firm will be cutting approximately 10% of its workforce.
An industry watcher told Forkast the industry needs to “buckle up” for the months ahead as downsizings are the result of significant contractions of the cryptocurrency market.
“People are … concerned about the tightening of the economy with interest rates going up,” said Jeremy Britton, chief financial officer at diversified crypto fund Boston Trading Co., explaining how the trading downturn is damaging firms’ ability to expand or retain staff. “People aren’t signing up to all the crypto exchanges and spending all their money on crypto like they were six or 12 months ago.”
Driven in part by macro-economic factors, the total crypto market capitalization has fallen more than 55% since its peak in November 2021, now sitting at just over US$1.2 trillion, according to CoinMarketCap.
Britton told Forkast that Boston Trading had quite limited exposure to LUNC, but any firm with a significant exposure would have taken a heavy blow to their bottom lines.
Crypto is not alone in its downturn, as traditional markets are also buffeted by the same headwinds.
The Nasdaq Composite index is down over 20% since last December, while individual stocks like Tesla Inc. and even retail giant Target Corp. trading down roughly 30% in the past few months.
“It’s very widespread,” Britton said, “I imagine there’ll be a lot of layoffs in the crypto industry, but also in the broader market with stocks and shares.”