Crypto layoffs: What can follow after this?

Highlights

• Coinbase, Gemini, Crypto.com, and BlockFi have announced their plans to cut jobs amid the bearish crypto market.
• The crypto market has come to just US$903.38 billion with a trading volume of US$105.83 billion, according to CoinMarketCap, after the recent fall.

The crypto markets have been under tremendous pressure of late. With leading crypto spiralling down, the crypto market has gone down to just US$903.38 billion with a trading volume of US$105.83 billion, according to CoinMarketCap, after the recent fall.

But it’s not just the crypto market that is facing the heat, the crypto firms are worried about the future as not just the money and investment, even jobs in the crypto firms are volatile.

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Coinbase has already announced that it will lay off a fifth of its workforce. Coinbase CEO and co-founder Brian Armstrong cited those oprational costs as the major reason for this decision.

Armstrong in a message said that even though Coinbase managed to survive four crypto winters, going forward, they will be managing their spending through every down period.

The likes of Gemini (10%), Crypto.com (20%), and BlockFi (20%) announced their plans to cut jobs amid the bearish crypto markets. After the layoff news, Gemini officials said that they went on an overhiring spree after the last year’s bull run.

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Only FTX is preferring to stick to its resources. CEO Sam Bankman-Fried has hinted that they were careful with their hiring, which has ensured them to grow despite the tough market conditions.

The crypto firms are taking heavy hits, incurring losses worth billions. It’s been a tremendous reversal of fortunes for several of these firms, who amassed billions when the Bitcoin had reached its all-time high in November 2021, only to fall back into crypto winter.

The leading influencers are incurring losses too. The likes of Changpeng Zhao, Sam Bankman-Fried, etc., have seen their fortunes vanish during this phase.

According to a report in Bloomberg, Zhao suffered significant losses during this crypto winter phase, which reduced his fortunes to US$10.2 billion (13 June). Zhao’s fortune stood at US$95.8 billion, as of 9 November. Similarly, Armstrong fortunes were reduced to US$2.1 billion from US$13.7 billion, and FTX’s Sam Bankman-Fried saw his fortunes go down to just US$8.9 billion due to the recent losses. 

Costs vs profits

The increased pressure and outflow from the exchanges caused by the selling pressure has increased the expenditure of several exchanges. This has resulted in increased overhead costs against the profits gained. Hence, many exchanges are now forced to lay off employees to meet their cost demands.

Exchanges are fearing recession after years of the boom. With the situation worsening with each passing day, the exchanges and firms are anticipating that it could get worse, and they have no choice but to remove employees or rescind any new offers.

Tip of the iceberg

While the layoffs were not expected at this stage, many experts believe that this could well be the tip of the iceberg for these exchanges. Experts feel that if the market continues to tumble, the situation could take some other turn, somewhat unseen till now.

For years, cryptocurrencies have been prone to boom-and-bust cycles. Whether other exchanges join the layoff spree remains to be seen, but for now, crypto firms are weighing in on how they can reduce the cost amid the free fall and volatility.

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