As discussions around inflation take up the pace, and companies try to cope with the slowing demand, crypto exchanges are facing the heat too.
According to a report, tech and crypto companies have laid off more employees in May, than in the previous four months combined together, reported by MarketWatch. Adding to the misery, many existing job offers given to prospective candidates are being withdrawn.
Many believe this can be an onset of crypto winter, leading to highly volatile market conditions overall.
Read ahead as we understand the entire situation around layoffs by cryptocurrency exchanges more clearly.
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What’s Going on at Crypto Exchanges and Companies?
While cryptocurrencies face bearish market situations, the toll of the volatility is now seen on the workforce behind the industry. The string of layoff announcements started in April 2022, with Robinhood deciding to lay off roughly 9% of its workforce.
Following this news was the announcement made by Bitso, which decided to lay off 80 employees due to a bearish crypto market.
On June 2, the co-founders of Gemini revealed to lay off 10% of their workforce. “We are writing to update you on a difficult decision that will impact a number of you and the overall size of our team,” the co-founders of Gemini explained in a blog post.
The Blog Post on Gemini’s Website
The same day, one of the largest and most well-known cryptocurrency exchanges in the world, Coinbase announced to stretch its ongoing hiring freeze.
In the Middle East also, Rain Financial- one of the largest cryptocurrency exchanges in the region- decided to lay off dozens of employees.
In Latin America, Coinbase-backed 2TM announced to lay off 12% of its 750-strong workforce, taking the “changes in the global financial landscape” into consideration.
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Why are Layoffs Happening in Crypto Exchanges?
The decision for layoffs comes as the Federal Reserve take steps toward easing the inflationary scenario in the economy.
As the macroeconomic situation eases down, eventually, the crypto exchanges are maybe bracing for the rate hikes by the Fed.
There is wide speculation around the onset of a crypto winter, which will come soon. A crypto winter might come when there might be a decline in new customer revenue from outside the industry, retail predictions as well as potential capital investors.
Would Situation for Crypto-Exchanges Improve?
The ongoing crypto exchange layoffs might be termed as an onset of a crypto winter by many experts and analysts in the space.
However, one thing to note here is the fact that cryptocurrency markets tend to rebound from a low at all times. Back in 2018, as Bitcoin fell by almost 70% after reaching an all-time high of $20,000, many were wary of the potential behind the concept of cryptocurrencies overall.
Although, as with equity markets, the cryptocurrency market seems quite optimistic to rebound from this. Also, the ongoing layoffs can be termed as a reaction to the mass hiring taken up by mass companies just after the pandemic slowed down a little.
However, not all seems bad. In a Twitter thread, the CEO of FTX, Sam Bankman-Fried notified that the hiring at the exchange will continue as is. He stated, “And because we hired carefully, we can keep growing regardless of market conditions”. Another good news came from Fidelity Investments, which has decided to hire to fill up to 110 new people to assist in their expansion plans.
What Does the Future Hold?
Even if a list of experts and analysts term the current scenario as crypto winter, things can take a turn for good down the line.
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What the current layoffs can mean is a better hiring process, strategy and structure. As exchanges like FTX still stay strong to hire more employees, it certainly can make other exchanges follow suit.
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Source: https://insidebitcoins.com/news/crypto-exchange-layoffs-heres-whats-happening