The prolonged downturn in cryptocurrency prices, along with broader tech sector woes, has led to a growing number of layoffs at crypto firms as participants brace for a bumpier ride ahead.
On Thursday, the Winklevoss-led crypto exchange and custodian Gemini was one of the latest to announce job cuts of about 10% of its workforce, with the firm citing “turbulent market conditions that are likely to persist for some time.” Soon after, Middle Eastern crypto exchange Rain Financial said it was cutting dozens of jobs due to the difficult market.
On top of those pieces of news, the largest publicly-traded U.S crypto exchange, Coinbase Global (COIN), reiterated on Thursday that it would be extending its previously-announced hiring pause and even rescinding accepted job offers as part of cost-cutting maneuvers amid tough market conditions.
“The recent market volatility and subsequent layoffs will likely continue into this summer,” predicted Masha Boone, VP of people at NFT exchange Rarible. “However, it is important to recognize this as an opportunity to reflect on what is needed in the crypto space and reconsider where the industry is headed from here.”
For her part, Boone told CoinDesk that Rarible was using the turmoil as an opportunity to strengthen its internal development and product teams.
Exchanges particularly hard hit
Cryptocurrency’s downturn has coincided with a rout in public markets, with interest rate hikes designed to tamp down inflation spooking investors in many high-flying technology and growth equities. And crypto exchanges that may have relied on retail traders during a time of excess liquidity in the system have seen significant slowdowns in trading.
As a result, crypto exchanges have been among the quickest to cut jobs in the current environment. In addition to the moves by Gemini and Coinbase, Argentina-based crypto exchange Buenbit recently laid off 45% of its staff, top Latin American crypto exchange Bitso cut 80 employees out of its workforce of 700+ workers and the holding company for leading Brazilian exchange Mercado Bitcoin laid off over 80 employees.
“It is natural that the exchanges, which are currently seeing lower volumes, are cutting back,” said George Sutton, an equity analyst with research firm Craig Hallum. “The beauty of this industry is there are a plethora of disruptive models in the digital currency and blockchain space to gladly hire any available talent. We view the volume declines as temporary,” Sutton told CoinDesk via email.
Going forward, crypto companies with valid use cases and utility are the ones that will best survive, according to Nicholas Strange, founder of Seattle-based hiring firm Crypto Talent. Many crypto firms have been through downturns before, and have become better at managing their treasuries, Strange told CoinDesk. Additionally, quarter-over-quarter venture capital funding remains at all-time highs, and certain VC firms may use this downturn to continue funding promising crypto-related projects, Strange said.
Crypto companies raised a record $30 billion of venture capital last year, and the number of deals in the sector remains high despite the recent fall in cryptocurrency markets, Morgan Stanley told clients in a recent note. However, deal activity is likely to drop in the future, the investment bank noted.
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