The cryptocurrency market has suffered more than expected lately. Over the past few weeks, the fall in the price of major cryptocurrencies has seriously affected the market. Initially, it was the investors who were affected and suffered huge losses, but today the cryptocurrency exchanges and their employees are also suffering from this slowdown.
Coinbase decided to make some changes after the big losses it suffered. As the price of cryptocurrencies continues to crash, it doesn’t look like the market will be able to recover anytime soon, that’s why they decided to cut a fifth of their workforce.
So far, the layoffs are estimated to affect around 1,100 people. This move by Coinbase is also worrisome and has caused many market analysts to say that the cryptowinter arrived on the cryptocurrency market, otherwise Coinbase would not have laid off such a large number of workers.
It should be noted that news of the Coinbase layoffs fell without warning. This measure came as a surprise to both the public and those affected. And that’s very much in line with the results of the company’s latest financial report which posted a net loss of $430 million in the first quarter of 2022.
With a loss of 430 million dollarsand a net profit of $840 million last quarter, Coinbase had to make an important decision and that was to freeze new hires, also freeze permanent hires and remove a large number of employees from its workforce.
A relevant element in this case is that the layoffs are equivalent to the number of new hires made by the company during the first quarter of this year. Data shows the company hired 1,218 workers in the first quarter, bringing the workforce to 4,948 employees and laid off about 1,100 people this month.
Coinbase is on the razor’s edge
First and foremost, Coinbase is an online platform where retail transactions of buying, selling, transferring, and storing cryptocurrencies take place. And in the first quarter of this year, at least 80% of revenue came from retail transactions, which is not bad, but bitcoin, which is the most important cryptocurrency in the market, fell more 70% from its previous all-time high of nearly $70,000 in November last year.
And this downward trend has not only manifested itself in bitcoin. It also extended to Ethereum, which is the second most important cryptocurrency in the market, which fell significantly during the same period, leading to a drop in Coinbase’s trading volume, leaving the exchange in red, and a large number of employees had to be removed from the workforce.
Among the data collected so far, it emerged that Coinbase traded less than $80 billion during the month, while the average was $110 billion. And if we add to this the fact that the company’s stock price fell more than 80% from its opening price last year at $381 to close at $55 on June 16, we realize that Coinbase is going through a major crisis.
And it’s not just something happening with Coinbase. Other cryptocurrency exchanges have taken similar action. A stock exchange operating in Argentina announced the layoff of 45% of its workforce last May. Clearly, mass layoffs like these are a message that something is wrong. With cryptocurrency trading slowing, exchanges are going through tough times and need to take action to stay afloat in hopes of a quick recovery.
As far as recovery is concerned, little or nothing is known. In the cryptocurrency market, anything can happen, but what the market feared is happening, which is that “winter is coming”
We don’t know what will happen in the future, and while we can always hope for a rebound, we don’t really know how cryptocurrencies will react. The forecast is that somewhat difficult times lie ahead, but still with the hope of a recovery in the medium term, but for now the massive layoffs should continue.