Crypto exchanges – The entire globe watched as major tech companies like Amazon and Meta laid off hundreds of thousands of staff.
2023 saw the movement persist and spread to the cryptocurrency industry.
A CoinGecko report states that a surge of layoffs in the cryptocurrency industry made January 2023 the second-worst month for layoffs.
More than 2,806 people lost their employment as a result.
The layoffs
The total number of layoffs in the cryptocurrency sector last month may have set the year on track to top 2022’s total of about 7,000.
The data indicates that layoffs are taking place as businesses are under increasing pressure from the bear market and difficult global financial conditions.
Centralized cryptocurrency exchanges, which accounted for 84% of all layoffs in January’s data, made up the majority of the reductions.
Lower trading volumes and falling revenues were noted by the academics as important contributing causes to the layoffs.
Exchanges
The following are some of the prominent cryptocurrency exchanges that reported widespread layoffs in January:
- Blockchain.com
- Coinbase
- Crypto.com
- Huobi
- Luno
Several businesses, like Coinbase and Crypto.com, started removing more people in 2022 (June, to be specific).
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The COO and co-founder of CoinGecko, Bob Ong, offered his two cents and said:
“During the bull market run, crypto exchanges expanded aggressively in response to the rapid growth in retail investor demand.”
“While crypto companies, in general, have been hit hard by the onset of crypto winter amid a tough macroeconomic environment, layoffs have revealed that exchanges, in particular, have been ‘swimming naked’ and can no longer sustain their previous excesses.”
Recovery
The crypto market somewhat made up some of the losses it suffered in 2022 in January.
Bitcoin, however, had a value increase of over 40% last month.
“It remains to be seen whether crypto exchanges will need to take any further cost-cutting measures,” said Ong.
However, with 3,003 jobs lost, June 2022 continues to hold the record for the most layoffs at cryptocurrency exchanges.
As a result of the Terra ecosystem’s collapse, it was the first significant catastrophe.
Terra
The collapse of Terra’s UST stablecoin and the governance token LUNA in the middle of the year caused the crypto market to experience its most difficult period.
When it dropped from 100% to a fraction of a cent, LUNA was in the top ten.
The processes behind Terra and its stablecoin as well as widespread fear are to blame for the collapse.
When they heard that the stablecoin was declining, several investors looked for a way out.
The 20% rate was first noted as constant, but it began to decline in March after Proposal 20.
According to proposal 20, the interest rate would climb by 5% if Anchor’s reserves did.
However, the interest rate would also reduce if they fell by 5%.
Further collapse
When cryptocurrency exchange site FTX crashed in November, the pressure on the cryptocurrency market increased.
As a result of the collapse, other cryptocurrency exchanges were also impacted, and 1,805 people lost their employment.
Companies exposed to FTX were also heavily impacted, including:
- Genesis Trading
- Galaxy Digital
- Voyager Digital
Millions of dollars that were stored with the crypto exchange were lost by several of the companies.
Investors’ access to their money was also blocked.
The CoinGecko research states that centralized cryptocurrency exchanges were responsible for 82.2% of 2022’s November layoffs.
Crypto still matches a larger amount of job losses in the tech industry, accounting for 4.3% of total tech layoffs last year.
The percentage of total tech layoffs was significantly lower in January, at 4%.
The following industries suffered the most from widespread layoffs:
- Consumer technology
- Food tech
- Transportation
Image source: Wired
