As market volatility is projected to persist, a rising number of crypto companies are laying off employees

04-Jun-2022 By: Rohit Khandelwal

As market volatility is projected to persist,

a rising number of crypto companies are laying off employees

As participants brace for a bumpier ride ahead, the protracted drop in cryptocurrency values, along with broader IT sector concerns, has resulted in an increasing number of layoffs at crypto firms.

The Winklevoss-led crypto exchange and custodian Gemini was one of the latest to announce job layoffs, citing "volatile market circumstances that are likely to linger for some time" as the reason for the reduction. Rain Financial, a Middle Eastern crypto exchange, said shortly after that it was laying off dozens of employees owing to the challenging market.

In addition to these developments, Coinbase Global (COIN), the largest publicly-traded cryptocurrency exchange in the United States, announced on Thursday that it would be trying to extend its previously announced hiring pause and even rescinding approved job offers as part of cost-cutting measures in the face of challenging market conditions.

Exchanges have been struck particularly hard.

The decline of cryptocurrency has coincided with a sell-off in public markets, with interest rate hikes intended to curb inflation frightening investors in many high-flying technology and growth stocks. Trading has slowed significantly on crypto exchanges that may have relied on retail traders during a period of abundant liquidity in the system.

As a result, cryptocurrency exchanges have been among the first to lay off employees in the present economic scenario. In addition to Gemini and Coinbase's actions, Argentina-based crypto exchange Buenbit recently laid off 45 percent of its workforce, top Latin American crypto exchange Bitso laid off 80 employees out of a workforce of 700, and the holding company for pioneering Brazilian exchange Mercado Bitcoin laid off over 80 employees.

"It's only natural that the exchanges, which are witnessing lower volumes right now, are reducing back," said George Sutton, an equities analyst at Craig Hallum. "The beauty of this industry is that there are so many innovative models in the digital currency and blockchain space that are prepared to hire anyone who is willing to work." Sutton said, "We see the volume drops as transient."

According to Nicholas Strange, founder of Seattle-based hiring business Crypto Talent, crypto startups with valid use cases and utility will do their best in the future. Many crypto companies have gone through downturns before and have improved their treasury management, according to Strange.

Furthermore, quarter-over-quarter venture capital financing continues at all-time highs, and some VC companies may take advantage of the current slowdown to continue supporting promising crypto-related businesses, according to Strange.

Despite the current drop in cryptocurrency markets, crypto businesses raised a record $30 billion in venture capital last year, Morgan Stanley informed clients in a recent note that the number of deals in the sector remains robust. Deal activity, on the other hand, is expected to decline in the future, according to the investment bank.

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