Coinbase, BlockFi See the Biggest Redundancies in Crypto, Study Shows
Coinbase, BlockFi and other major companies in the crypto sector have been adversely affected by the sustained downward trend across the digital and legacy financial markets. The companies have been forced to cut back on staff to stay afloat and continue operations.
According to a new study published in Addictive Tips with data from Layoffs and LinkedIn, Coinbase (COIN) and BlockFi are some of the most affected in the tech and finance industries. The sector has lost over 28,000 jobs by 2022 amid a 1% economic contraction in the US economy.
Coinbase and BlockFi, worst layoffs in technology and finance?
In the crypto industry, the downturn has been significant, with the top cryptocurrencies losing over 80% to 85% of their value from their 2021 all-time high. As for Bitcoin and Ethereum, the cryptocurrencies rose to $69,000 and $4,500, respectively, and are now trading at around $19,600 and $1,400.
The crypto market was able to reach around $3 trillion in total market capitalization as Bitcoin, Ethereum and other cryptocurrencies began a major bull run towards their current highs. By 2022, the total market capitalization of crypto crashed to an annual low of around $700 billion.
According to the report, this has led to massive redundancies across several sectors. This trend began in March 2020, with the announcement of the COVID-19 pandemic and lockdown measures. At the time, Bitcoin fell to a multi-year low of $3,000.
However, 2022 has seen another increase in layoffs as central banks rushed to curb inflation by raising interest rates, reducing credit and negatively impacting key economic figures. As shown in the chart below, BlockFi has lost 20% of its workforce while Coinbase has lost 18%.
This means a total of 1,350 jobs have been lost in both companies, and the crypto exchange has taken the biggest hit. The company fired 1,100 employees in 2022, making it the most affected in the financial sector for Q2 2022.
Only Robinhood and BlockFi come close with a combined roughly 600 layoffs in the same period for a total workforce reduction of 29%. The report wrote about the reasons behind this negative performance:
Financial startups like Coinbase, Robinhood and BlockFi took a big hit recently. These three companies deal in either stocks or cryptocurrency, both of which have seen a significant decline in recent months due to fears of an impending economic recession. These downturns have greatly affected the business of these companies and led to layoffs – a big surprise for companies that had been doing well in recent years, despite a global pandemic.
Is the worst part of crypto winter over?
With rampant layoffs in Coinbase, BlockFi and other major cryptocurrencies, with others in bankruptcy, and with major cryptocurrencies off 80% from their all-time highs, should investors start thinking about a potential bottom in the sector?
According to a report by Ecoinometrics, the traditional market and the crypto market, as measured by Bitcoin and Ethereum, may still experience some pain in the near future. Assets still have some distance from their previous lows, as shown below.
A report from Barron’s indicates that major players are already loading up on Coinbase’s stock, possibly preparing for the next bull run. The media claims that investors Tobi Lutke, CEO of Shopify, bought as much as $3 million in COIN. Will the position pay off?
At the time of writing, COIN’s price is trading at $74 with sideways movement on low timeframes.
