2022 was not a good year for the crypto industry. First, there was the Terra Luna crash in May. Then, industry giants like hedge fund Three Arrows Capital, cryptocurrency lender Celsius, and brokerage Voyager Digital all filed for bankruptcy.
The world watched Sam Bankman-Fried and FTX’s dramatic collapse with bated breath. Crypto exchange Kraken laid off 1,100 employees. Don’t forget all the reports of money laundering activities on Binance to top off the year.
After such a turbulent year, 2023 seemed to offer a wavering possibility of a rebound.
In early January, prices of numerous cryptocurrency coins seemed to be on the up and up. FTX lawyers announced they recovered over US$5 billion that could go towards repaying creditors. The crypto world was recovering.
But not for everyone.
The Great Layoffs
On January 5, crypto lender Genesis Trading was reported to be laying off 30% of its staff, going so far as to considering bankruptcy.
Then, on January 6, Seychelles-based cryptocurrency exchange Huobi announced it was planning to reduce its global headcount by about 20%.
Next, on January 10, cryptocurrency trading platform Coinbase announced it would be laying off 950 employees (20%) in a bid to reduce overall operating expenses by 25%.
Coinbase had already slashed its workforce by 18% in June 2022, also struck by the disasters of that year, CNBC reported.
On January 12, crypto brokerage Blockchain.com laid off 28% of its workforce.
The next day, Crypto.com, the Singapore-based cryptocurrency exchange company, announced it was also reducing its global workforce by about 20%.
Kris Marszalek, Crypto.com’s co-founder and CEO, claimed that its “prudent financial management” is due to the recent collapse of FTX, which significantly damaged trust in the industry.
Then, earlier this week on January 25, London-based cryptocurrency exchange Luno announced that it would be reducing its overall Luno team by 35% (roughly 330 employees), a decision that would also impact its Malaysian workforce.
Luno had been the first registered crypto exchange to be approved by Malaysia’s Securities Commission.
In an internal update, Marcus cited 2022’s unforeseen and “very extreme” events as reasons why Luno is downsizing its staff.
“This includes a global economic downturn coupled with an even bigger downturn in the tech sector overall, and on top of that, not just an ‘ordinary’ crypto winter, but a series of shocks including Luna, Three Arrows, and FTX that have had an overall compounding effect on our industry,” he wrote.
Indeed, the crypto market isn’t the only one affected. The tech industry at large has been experiencing plenty of layoffs as well. Google’s parent company Alphabet announced plans to cut its global headcount by 12,000. Microsoft is reported to have laid off 10,000 team members.
The reasons might lie in hiring sprees during the pandemic. As Forbes puts it, these layoffs represent a winding-back of those pandemic hiring policies.
Not all bad
Despite the layoffs, the fact remains that many cryptocurrencies have been improving since the start of 2023.
Bitcoin had peaked last year at US$47,078 on March 29, 2022, but had spiralled to USD$16,529 by the end of the year.
At the time of writing, though, Bitcoin has surged to US$22,865.80—still a way from its former glory, but perhaps on the right track to a full recovery.
Meanwhile, the price of Ether, Ethereum’s native token, has also been rising from January 1 onwards.
Binance, despite the will-they-won’t-they-go-to-court debacle, is planning a hiring spree in 2023, according to CEO Changpeng Zhao.
When will spring arrive?
According to Forbes, many analysts have been predicting a long crypto winter ever since Luna and FTX imploded.
Earlier this year, with the cooling inflation, The Star also interviewed analysts for their opinion towards the crypto investment landscape in Malaysia.
Edmund Yong, managing partner at blockchain consultancy company Celebrus Advisory, said many investors are “probably stuck deep in loss positions”.
Melvin Tan, the CEO of Singapore-based Frac Pte Ltd and a former Maybank Kim Eng banker, said Malaysia’s cryptocurrency market is expected to be slow in 2023, given the current bleak global macroeconomic forecast.
Aaron Tang, Malaysia’s country manager for Luno (and known as financial blogger Mr-Stingy), also recognised that the general market condition is under pressure, especially with the recent events within the crypto world.
As such, it might take time before the crypto market rebounds or even improves.
Another way to look at the situation at hand is that there’s only up from here, meaning that we’ve reached the market bottom for crypto.
Bottoming out in crypto refers to when we’ve reached the lowest trading price for a security or index over a specific time frame. As such, many investors may see this time as a good one for trading.
At the end of the day, crypto has been and will be a speculative and thus volatile market. The lack of regulation only serves to contribute to its unpredictability.
Yet, more and more countries have begun to introduce tax frameworks for crypto, which may signal crypto’s legitimacy.
While this culling of employees can make it feel like worsening times, in the long term, it might also mark better financial status of the organisation, and perhaps go towards improve the crypto industry as a whole.
- Read other articles we’ve written about cryptocurrency here.
Featured Image Credit: Luno / Coinbase/ Huobi / Blockchain.com / Crypto.com / Genesis