Crypto Layoffs : Volatile Market, Volatile Jobs

The promising-looking crypto market took a nosedive abruptly since May 2022. One crash after another shattered the illusions of investors. What happened to LUNA/TERRA​ and Celsius suspending user withdrawals​ basically caught everyone off guard.

And now, what happened to the coins are coming to the companies. We are seeing an unprecedented wave of layoffs among crypto companies, expected to hit hard and wide, starting from the heavy news at Coinbase, which announced to plan to lay off 18% of its staff in June​.

Early signs of crypto layoffs

In fact, long before Coinbase announced the dismissal of nearly 1,000 jobs, Argentina-based cryptocurrency exchange Buenbit announced at the end of May that it would lay off 45% of its employees​, nearly half of its entire workforce. Of course, the total number of people working at the South American crypto exchange is less than 200, so this only means that over 80 people losing their jobs, and it did not cause an uproar in the industry. However, Bluenbit CEO Federico Ogue once claimed on social media that the layoffs have nothing to do with the recent LUNA crash, but because technologies have entered a stage of "global overhaul".

Fazzaco has covered, too, multiple LATAM-based crypto companies firing people subsequently, including Bitso​ and 2TM​.

"Hired too fast, too soon"

Brian Armstrong, CEO at Coinbase, said that the main reason to their layoff announcement is because "the company overhired."

"At the beginning of 2021, we had 1,250 employees. At the time, we were in the early innings of the bull run and adoption of crypto products was exploding. There were new use cases enabled by crypto getting traction practically every week. We saw the opportunities but we needed to massively scale our team to be positioned to compete in a broad array of bets. It's challenging to grow at just the right pace given the scale of our growth (~200% y/y since the beginning of 2021). While we tried our best to get this just right, in this case it is now clear to me that we overhired."

Does the crypto market downturn have "an end in sight"?

For months, a number of analysts have warned of the coming "winter" in the crypto industry. The market has seen several ups and downs since its inception, and many believe the recent bear market has been largely attributed to excessive growth driven by speculation. But even though many people have already prepared mentally for the trough, the speed of the recession is still beyond many people's expectations: in early June, bitcoin slumped in response to the crypto lending giant Celsius announcing to suspend users' withdrawals. The price fell to the then-lowest point, $20,835, on the 14th. After a slight recovery, it continued to fall below the $20,000 line on June 18. The current bitcoin price is $20,355 (data on July 7), it fell by 34.65% month-on-month.

However, many companies are not well-prepared for the continuous "shocks". The Fed's rate hike in the first half of 2022 has investors moving funds from riskier places such as the crypto market, while the Russia-Ukraine crisis has exacerbated inflation and supply chain problems. Then came the LUNA crash and Celsius crisis mentioned above. The well-known crypto exchange Huobi Global also announced at the end of June that it may lay off more than 30% of its employees​, as if it were a response to the market spasm. Bullish.com, another crypto exchange, joined the layoffs by announcing it has dismissed 10% of its workforce​.

Conclusion

Although Binance has been quite maverick among all the market downturn and layoffs, announcing that it will recruit more than 2,000 employees​, the news does not give a boost to the bleak market. Experts are warning that people shouldn't expect a quick recovery of the crypto market. Current market forecasts are generally murky, and there are fears that the recession will continue. This is likely to be just the first wave of layoffs, and the entire crypto ecosystem will face more and more ferocious layoffs in the future.

Of course, some think that although they are not optimistic about the market in the short term, it is also a mistake to believe that the industry is dying. After all, there is still a lot of money circulating in the market.