Crypto

Bitcoin Crashes Below $23,000 as Crypto Exchanges Lay Off Workers

Yahoo Finance Live hosts discuss Bitcoin crashing below $23,000 as crypto exchanges start laying off workers.

video transcript

Let’s turn our attention to cryptocurrencies. Ryan has a lot to say about it. But we’ve certainly seen big declines on that front. A bruised crypto market. Bitcoin is down 25% in the last month. And we’ve seen… can we call it the carnage?

Oh yes, I would say yes.

Coinbase this morning reported layoffs, 18% of its workforce, saying they simply grew too fast. That comes on the heels of two announcements we received, BlockFi laid off 20% of their workforce yesterday, and then on Friday we had Crypto.com exiting and laying off 260 workers. That’s about 5% of their workforce. And there’s a common thread through all of this, whether it’s Coinbase or BlockFi saying, look, we’ve grown so fast in the last two years, this is the time to focus on profitability, hence the layoffs.

Yes, and you continue, I mean, even some comparatively smaller but still relatively important projects, Gemini, 10%, Bitcoin Market, 12%, Bitso, 10%. I mean, these are… this is very widespread throughout the crypto community. And I think this speaks, first of all, of the macro image, right? I mean, I think every single one of these announcements mentions deteriorating market conditions or something about the macro, which is not untrue.

I mean, when you look at what’s going on with Bitcoin, a lot of that is due to the tightening of this easy monetary policy that has often led to excess liquidity that people put into whatever pays the most, which seems be, at this present time, a lot of these crypto projects. So this is part of that deleveraging that I think even Ryan was talking about and it’s happening everywhere. But I think because the Bitcoin and cryptocurrency community is so leveraged, it’s going to be even more pronounced in that space.

It’s worth pointing out again, because we talk a lot about the crashes, but how quickly the crashes have happened. In November, Bitcoin was trading at $68,000. That was the last straw. And today, we are talking below 23,000. If you look at Coinbase, 370 or so at the November high. Look where it is today, 49.67. These are big losses that companies are seeing. And that’s… the results of this really aren’t just layoffs, but a huge setback in expansion plans.

Yeah, and I think… I mean, a lot of people might be looking at this and saying, oh, what does this mean for the job market? Are we already seeing… I mean, on the whole, this is still relatively small. It’s hard to say, well, people are getting laid off in the crypto space, so the unemployment rate will rise to 5%.

No no no no.

At the same time, though, what he does talk about is that this specific industry, which, as you mentioned earlier, was a bastion of growth, many of these companies are still relatively early in their corporate life. I mean, although obviously Crypto.com has enough money to sponsor an entire stadium in Los Angeles…

$700 million.

That’s a lot of money.

It is worth mentioning again, by the way, the 20-year naming rights.

Well, and Brian Armstrong buying a $133 million house late last year. But look, at the end of the day, these were high-growth companies that were probably really excited to have all these additional employees on the boat so they could generate new revenue streams and continue to grow their companies. Not all of them are cash flow positive right now.

Now they have to reverse all those plans. And you wonder what that is going to do with innovation in this space. It’s not to say there won’t be any more NFT projects in 2023, but it does say, look, there’s a contraction going on here that’s more than just about staffing. Perhaps some of that innovation will start to emerge as well.

Well, and Brian Armstrong says that, you know, to sum up that this could go on for an extended period, that we’re entering a crypto winter, which we’ve heard over and over again. But it’s certainly not something you expect to change overnight.

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