Crypto Sacks Its Workforce
It’s a bad omen when crypto exchanges pull back from hiring and I am not talking about just a few people.
Drastic cuts are taking place as we speak in crypto land.
It was just a few years ago when no number of crypto hires could satisfy labor demand.
Yet, sadly, when an asset class has no cash flow, the effects to the downside can be quite nasty and often overshoot.
In an about-face that really shows investors the current dilemma in the crypto ranks, it will be a long time before crypto companies will feel the urge to ramp up labor capacity as they did when crypto surged to $65,000 per BTC.
Interest rates will need to be a lot lower as well since BTC has proven to perform well during a time of low inflation and cheap capital.
BTC has languished at around $30,000 during this bear market rally and it could signal that it won’t take part in the recovery.
Much of the capital has gone to safer pastures like the US dollar which has been a solid outperformer this year.
An even better outperformer would be energy stocks.
They have really set the pace for all asset classes in 2022 to the detriment of cryptocurrencies.
Gemini crypto exchange founders Cameron and Tyler Winklevoss are laying off 10% of the workforce at Gemini, a first for the U.S.-based cryptocurrency exchange and custodian.
They described it as a “contraction phase” known as “crypto winter,” which has been “further compounded by the current macroeconomic and geopolitical turmoil.”
Fellow crypto exchange Coinbase recently reported that revenue had fallen 27% from a year ago.
The last so-called crypto winter ran from 2018 into the fall of 2020 as the value of cryptocurrencies plunged and layoffs were rife.
L.J Brock, chief people officer at Coinbase, announced that Coinbase will not only extend its hiring pause for the foreseeable future but also rescind accepted offers.
The 180 rescinded offers are a bad look for the crypto industry yet again.
The industry is confronted with a barrage of legitimization issues and a tendency of creating poor business practices.
At the start of 2022, Coinbase’s plan was to boost its staff by 2,000. The company added 1,218 employees in the first quarter of 2022 alone, bringing its total headcount to 4,948.
Other fintech start-ups such as Robinhood and BitMEX have recently cut staff.
As many as 80% of tech workers are considering looking for another job, and more than half have actually applied for one since March.
It’s not surprising that a speculative asset class will shed workers at a time when the price of crypto has gone nowhere.
Higher prices lure in the incremental crypto investor and when that disappears, times can be lean.
Many of the investors that came in at the peak are sitting on huge losses and it’s hard to see where the next incremental investor will come from.
The crypto industry finds itself in a transition stage where the narrative has switched from the price of its bellwether coin to the infrastructures health and future regulation.
Many investors looking for that jet fuel to take BTC to $100,000 have left the building after the conditions which set BTC on fire have been quickly extinguished.
Now we are set for this painful transition stage where a speculative asset treads water and attracting the next undecided crypto investors becomes harder and harder until the infrastructure and use case improve.
