Crypto winter has officially arrived with the biggest names in the industry announcing major cuts to their workforce and pausing all hirings. This week, crypto titans Coinbase and Crypto.com announced they are reducing their global workforce by roughly 18% and 5% respectively. While crypto lending platform, Blockfi Inc. followed suit with a workforce cut of 20%.
The crypto layoffs are an indicator that the overall market is heading into what industry experts are calling a “crypto winter”. Just earlier this month, the exchange founded by the infamous Facebook Winklevoss Twins said they were slashing over 10% of their employees. And Coinbase, one of the United States’ most prominent exchanges, announced they are freezing all hiring and even going as far as rescinding job offers.
Blockfi founders, Flori Marquez and Zac prince elaborated on their reason to cut a quarter of their workforce. Citing current market conditions and the overall negative impact it is having on the growth rate of Blockfi and so many other crypto companies. Originally founded in New Jersey, Blockfi is currently employing just shy of 850 employees, of which around 200 will be cut in the following week to compensate for the crypto winter.
Will companies weather through the crypto winter or will we see more companies cut their workforce until they are down to their bare bones?
Why Are These Cuts Happening?
Coinbase like so many other early adopters of Blockchain technology started this calendar year strong. Riding off the wave of the post-pandemic boom, where citizens worldwide enjoyed stimulus checks and an abundance of liquidity.
Unfortunately, those times have passed and we are currently entering what analysts are calling a “crypto winter”. Putting an end to the hiring frenzy that fueled the entire crypto community for more than five fiscal quarters.
This is tied to a growing inflation problem across the globe, an ongoing war in Ukraine, and the fear surrounding a global recession leading to the great cuts we are witnessing today in the crypto market.
As of the time of writing, Coinbase started 2021 with roughly 1,250 employees and over the course of the post-pandemic boom, they ballooned their staff to a whopping 5,000… Until now.
What To Expect From The Crypto Winter
Crypto’s winter often occurs in tandem with the price movement of the stock and equities market—this time it is no different. As the Dow Jones dips below 3,000 points and the NASDAQ sees red all across the board in technology stocks, institutional investors are reacting in a similar vein with the crypto market.
Large sell-offs are occurring leading to the crypto market we find ourselves in today. Until the massive sell-offs ease, and bother retail and institutional investors’ confidence is restored, the winter will continue.
Chief Executive Officer of Coinbase, Brain Armstrong went on to say,
“We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period,”
Armstrong explained in an email with CNBC,
“While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment.”
Where We Go From Here
Like so many crypto companies across the world, Coinbase will be but one of many to ease their business practices and slow down on their engines. But not all is lost as Ann Choi, Chief Operating Officer at Coinbase explains,
“We will continue to invest in incredible innovative areas of crypto that we think are emerging over the longer term, but we’re probably going to do those in a more measured way in this type of an environment.”
And so dear reader, there is still plenty to look forward to. Like many things in life, this winter is cyclical and it too shall pass. Just remember like Coinbase CEO Brian Armstrong, states, stay strong and don’t act out emotionally causing harm to yourself or others.
Know that this crypto winter will end and Coinbase will thaw off and begin producing again as we expect it.
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