The ongoing downturn in cryptocurrency prices, along with broader problems in the tech sector, has led to a growing number of layoffs at crypto companies as participants prepare for a bumpier ride.
On Thursday, Winklevoss-led crypto exchange and custodian Gemini was among the latest to announce job cuts of about 10% of its workforce, with the company citing "turbulent market conditions that are likely to continue for some time." Shortly after, Middle Eastern crypto exchange Rain Financial announced that it will cut dozens of jobs due to the difficult market conditions.
In addition to this news, the largest publicly traded U.S. crypto exchange Coinbase Global (COIN) reiterated on Thursday that it would extend its previously announced hiring freeze and even rescind accepted job offers as part of cost-cutting maneuvers amid the difficult market conditions.
"The recent market volatility and resulting layoffs will likely continue through the summer," predicted Masha Boone, VP of people at NFT exchange Rarible. "However, it's important to recognize this as an opportunity to think about what's needed in the crypto space and where the industry will go from here."
For her part, Boone told CoinDesk that Rarible is using the turmoil as an opportunity to strengthen its internal development and product teams.
Exchanges hit particularly hard.
The cryptocurrency downturn coincided with a rout in public markets, with interest rate hikes meant to curb inflation spooking investors in many high-flying tech and growth stocks. And crypto exchanges, which relied on retail traders during a time of excess liquidity in the system, saw a significant drop in trading.
As a result, crypto exchanges were among those that shed jobs the fastest in the current environment. In addition to Gemini and Coinbase, Argentine crypto exchange Buenbit recently laid off 45% of its staff, while leading Latin American crypto exchange Bitso laid off 80 of its 700-plus employees.
"It's only natural that exchanges currently experiencing lower volumes are making cuts," said George Sutton, equity analyst at research firm Craig Hallum. "The beauty of this industry is that there is an abundance of disruptive models in the digital currency and blockchain space that are happy to hire any available talent. We view the volume declines as temporary," Sutton told CoinDesk via email.
According to Nicholas Strange, founder of Seattle-based recruiting firm Crypto Talent, the crypto companies that will survive in the future are those that have valid use cases and high value. Many crypto companies have experienced downturns before and have gotten better at managing their finances, Strange told CoinDesk. In addition, quarter-to-quarter venture capital funding is at an all-time high, and some VC firms may take advantage of this downturn to continue funding promising crypto projects, Strange said.
Crypto companies raised a record $30 billion in venture capital last year, and the number of deals in the sector remains high despite the recent downturn in cryptocurrency markets, Morgan Stanley said in a recent note to clients. However, it is likely that deal activity will decline in the future, the investment bank said.