The crypto industry is experiencing turbulent times, with crypto winter forcing them to shut down operations and freeze hiring. During this bear market, there has been a lot of news about crypto layoffs. According to a report released on November 14 by CoinGecko, layoffs in the crypto sector will account for 4% of the overall tech sector by 2022. As of Nov. 13, only 4,695 crypto sector employees had been laid off. This placed the cryptocurrency sector in the tenth position for layoffs across the technology industry in 2022. In 2022, over 100,000 people in the technology sector lost their jobs.
Crypto Winter
The term “crypto winter” refers to a cryptocurrency market that is underperforming. There are no widely accepted, specific guidelines for how far cryptocurrency prices must fall to be considered a crypto winter. However, when one has started, market leaders and influencers tend to agree publicly, as was the case in early 2022. The majority of cryptocurrencies operate with little oversight, laying the groundwork for fraud and scams that consumers should be aware of, including the risk of long-term losses when holding crypto.
Tech Giants Mass Layoff
The consumer technology industry ranked top for axing personnel, with 18,486 employees put off so far this year. This accounts for 15.6% of all technology layoffs.
This figure includes notable layoffs at Meta and Twitter. Earlier this month, Mark Zuckerberg’s social media company laid off 11,000 workers. This amounted to roughly 13% of its total workforce, accounting for nearly 60% of all consumer tech layoffs this year. When Elon Musk took over Twitter, one of his first moves was to lay off employees. An estimated 3,700 people were laid off, accounting for 20% of the total consumer tech workforce. Other tech giants that cut staff and freeze hiring include Apple, Amazon, Alphabet (Google), Microsoft, and Stripe.
Crypto Mass Layoff
The crypto industry, as part of the technology sector, is going through a rough patch, with crypto winter forcing them to shut down operations and freeze hiring. Following a series of ‘black swan’ events such as the FTX collapse and the Luna Terra crash, higher interest rates by Feds combined with regulatory uncertainty, and investor withdrawals, crypto markets are struggling to thrive. The number of companies announcing mass layoffs is rapidly growing. As of December 5, CoinDesk reported that over 26,000 jobs had been lost.
On 11 Nov, Bloomberg reported that Coinbase had further cut off 60 of its staff as part of the company’s plan to manage operating expenses in response to current market conditions and ongoing business prioritisation efforts. According to a new report, Crypto.com massively understated its layoffs, and it has quietly let go of over 2,000 employees as trading volumes dry up as the bear market continues. Bybit announced on December 4 that it will reduce its workforce by at least 30% due to market deterioration. Kraken, a cryptocurrency exchange, laid off 1,100 employees in December, reducing its workforce by 30%. Dapper Labs, which founded the NFT marketplace NBA Top Shot, reduced its workforce by 22% in November 2022, laying off 135 employees.
Banks to End Crypto Winter in 2023
Although winter winds continue to chill the crypto market, recent comments from banks and investment managers reveal expectations of a thaw in the new year.
The Federal Reserve is ready to slow down its planned interest rate rises, most big banks in the US expect Bitcoin (and other crypto coins) to rise again in 2023. Marion Labeure of Deutsche Bank said: “Although investors have suffered significant losses, we believe this second ‘crypto winter’ will be a net positive because the FTX collapse will edge the crypto ecosystem closer to the established financial sector.”
Analysts from JP Morgan suggest that Ethereum will be rejuvenated by the Ethereum Surge, which is expected to act “as a catalyst for development in the cryptocurrency markets” and increase blockchain use cases. This upgrade is expected in the next six to twelve months.
Other major financial institutions have identified different bullish catalysts, with Bank of America saying that “an increased urgency for regulation may enable greater institutional engagement”, and VanEcK claiming that Ethereum, Polygon, Avalanche, Polkadot and Cosmos are set to emerge as the winners of the next major wave of institutional adoption.
Increased Regulation in Crypto in 2023
Multiple countries, including the United States, Australia, France, the European Union, and even Ukraine, have announced plans to develop a more robust regulatory framework for cryptocurrency next year.
Ryan Shea, Co-Founder of Stacks, believes that by 2023, there will be a concerted push for regulation. “Due to the high profile failures of several crypto firms during 2022, which were entirely attributable to the dubious practices and behaviours of individuals not the technology, governments not only feel compelled to act to protect and safeguard consumers, but they feel qualified to act because they have witnessed numerous similar events in TradFi over the preceding decades. Consequently, this regulatory push is being both strengthened and accelerated.”
This is the first serious economic crisis to happen since Bitcoin debuted on the globe, and there is a good likelihood that 2023 will present the opportunity to determine if it can operate as intended during times of economic struggle.
