Reeling in an uncertain climate, the cryptocurrency market feels the brunt of effects wrought by various occurrences and attempts to right itself as the Federal Reserve gears up to deliver a potential death blow come Wednesday. In preparation for the coming wintry storm, one of the biggest cryptocurrency exchanges, Coinbase, is cutting back on staffing, slashing up to 18% of its employees akin to similar firms in the fold, including BlockFi and Gemini.
The news comes via an internal blog post headed by Coinbase, highlighting all of the major details surrounding the job cuts. The company specifies three key aspects behind the workforce slashing, including the ongoing economic downturn, cost management in a redlining market, and too speedy growth, the latter of which is made even more poignant per the company's 1,200 new employees in 2022 alone.
In early February, Coinbase announced that it would be adding 2,000 employees to its Product, Engineering, and Design arm. Only a few months later, it would have to walk back these ideals, necessitating a freeze on employment, to mirror similarly situated tech companies in the market flatlining. The firm expects to end the current quarter with around 5,000 total employees.
"Our employee costs are too high to effectively manage this uncertain market. While we tried our best to get this right, in this case it is now clear to me that we over-hired," Coinbase CEO Brian Armstrong said in the blog post.
Coinbase staff departing in the purge will be equipped with a severance package at a minimum of 3.5 months in pay. It's important to note that Coinbase is not the only one facing such troubled times, as crypto lender BlockFi Inc. recently sent home a whopping 20% of its staff, as well as crypto exchange Gemini Trust Co., which is cutting 10% of its workforce, and even Crypto.com, which highlighted around 260 job cuts.
Following its announcement on Tuesday, June 14, all such firms, even now Coinbase, have voiced the impending doom now facing the cryptocurrency market: the crypto winter. This type of occurrence signifies a time of severe slump, with flat trading becoming the ever-increasing norm. And many are signifying that this current crypto winter will be a harsh and long one, with Jared Dillian citing that light at the end of the tunnel proves to be the only positive outlook:
"Crypto will have another winter, but out of that neglect will grow another bull market, led by a handful of cryptocurrencies that will grow far beyond what exists today," Dillian writes.
Despite the myriad woes and uncertainty, others are seemingly going against the grain, such as Cahnpeng Zhao and Binance. The cryptocurrency exchange announced yesterday, June 13, that it will be adding as opposed to subtracting to its workforce and is planning on expanding its foothold in the mergers and acquisitions field. In the Binance vs. Coinbase debate, one thing is certain: Binance knows how best to keep its internal spending in check.
Coinbase stock is seeing a dip of 5.4%, and the year to date has dropped 80% overall. The firm's shares have already experienced a 79% low this year alone, likewise announcing a 27% decline in revenue from 2021 due largely to a drop in users from the last quarter.
