It’s no secret that the digital currency industry is in a massive, largely self-inflicted bear market. After the frenzy that peaked in late 2021, several high-profile firms collapsed in spectacular fashion, leading many to reassess the future of the industry and cool off on the speculation.
If the first two months of 2023 are anything to go by, the pain is far from over. In just the last eight weeks, over a dozen new rounds of layoffs have been announced by some of the key players in the industry.
Is this the worst digital currency bear market ever? It’s certainly the largest, and with regulators on the warpath and macroeconomic conditions spooking investors across all industries, it’s unlikely to get better anytime soon.
A complete list of the layoffs in 2023 so far
CoinGeek keeps tabs on everything happening in the digital currency industry. These are the layoffs we have reported on so far this year.
In early January, Justin Sun’s Huobi announced it would cut 20% of its staff. The firm was battered after its sudden and unceremonious exit from China, where the bulk of its customers lived.
Next up was Genesis Trading, the speculative arm of Barry Silbert’s beleaguered Digital Currency Group (DCG). It announced it would lay off 30% of its staff, around 60 people, as part of an attempt to keep the firm afloat amidst the chaotic fallout from the collapse of Genesis Global Capital.
A little later in January, Coinbase (NASDAQ: COIN) announced a second wave of layoffs that would cut 20% of its staff, affecting around 950 people. It estimated it would lose around $500 million in 2022. That turned out to be a slight overestimation, and it only lost $371 million instead.
Further layoffs were then announced by Consensys, Amber Group, and DCG portfolio firm LUNO. Keep in mind that we’re still in the first month of 2023 here.
In February, Cointracker, Prime Trust, Dapper Labs (the firm behind NBA Top Shots), and Polygon (NASDAQ: MATIC-USD) all announced huge waves of layoffs. The two biggest announcements in February were that Kraken would shut down its Abu Dhabi office shortly after its launch and Bittrex would lay off 83 employees.
So far, it hasn’t been a good start to the new year for the industry. As key figures like Sam Bankman-Fried face new criminal charges and regulators tighten the noose on those they believe have violated laws and regulations, it’s a pretty safe bet we haven’t seen the worst of it yet.
Has the digital currency bubble popped?
In 2000, one of the biggest speculative manias in recent history ended when the Dotcom bubble burst. Overnight, companies that were touted as the future of everything became worthless, leaving those who had bet big on their stocks holding the bag.
Has the same thing happened in the digital currency industry? Will there ever be another bull market, or is this the bubble popping for good? It’s impossible to predict the future, but with regulators circling, the U.S. Securities and Exchange Commission (SEC) chairman saying everything except Bitcoin is a security, and macroeconomic conditions causing big banks to lay off reams of people, it’s not looking good for the industry in the near-term future.
For what it’s worth, my prediction is that after a period of consolidation and reflection, there will be another bull market, just as there was after the Dotcom bubble. However, it won’t be the same as before; rather than running headlong into ‘crypto’ casinos like Binance to buy up worthless tokens, savvy investors will fund companies intending to build real value utilizing blockchain technology.
Firms like Ayre Ventures and Unbounded Capital, who are backing companies building applications on the infinitely scalable BSV blockchain, will benefit from this longer-term, more sustainable bull market. Of course, some of the founders of the companies building these apps will win big, too. Just as Amazon (NASDAQ: AMZN) and Google (NASDAQ: GOOGL) arose from the ashes of the Dotcom era, the world’s largest companies 20 years from now will rise out of the ashes of the digital currency industry.
As Sam Bankman-Fried and people like him go to jail, and as regulators take action to wind down the insane margin trading that characterized the last bull run, I predict we’ve seen the last of the speculative mania that has characterized the industry so far. Next, we’re going to see the bull run of all bull runs, lasting decades and focused on true value creation and utility.
Hopefully, some of those who have lost their jobs, thanks to the recklessness seen in the last few years, will find permanent homes at firms determined to build the future on the blockchain.
Watch: The Future of Digital Asset Exchanges & Investment
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