Centralized cryptocurrency exchanges Coinbase and Gemini have suspended their hiring policies as concerns over the cryptocurrency winter intensify.
Coinbase Extended Hiring Pause
Coinbase, one of the biggest centralized crypto exchanges, announced yesterday that the hiring of new and backfill roles would be on pause for the foreseeable future. Coinbase will also be withdrawing a number of offers that had recently been made and accepted, in those cases where the prospective employees had not yet begun working.
Accoring to the official statement, the decision was made “in response to the current market conditions and ongoing business prioritization efforts”. Earlier in May, the exchange hinted at its plans to slow down hires in order to better position to manage the crypto market downturn caused by macroeconomic conditions.
“We always knew crypto would be volatile, but that volatility alongside larger economic factors may test the company, and us personally, in new ways,” the official statement read.
Despite prior ambitions to triple the size of the company, the year has not started off successfully for Coinbase.
A month ago, the exchange posted $430 million losses for the first quarter of 2022, due in part to decreasing trade volumes, and a 19% lower number of active users when compared with Q4 of the previous year. Subsequently, the stock price of Coinbase has lost more than 58% of its value over the past month alone.
Last year the U.S.’s largest crypto exchange displayed impressive growth, exceeding the $6.4 billion revenue threshold required to become the world’s first crypto company in the Fortune 500, a list of America’s largest corporations by revenue.
Gemini Cuts Staff
It seems this issue is not exclusive to Coinbase, as another prominent crypto exchange, Gemini, has announced plans to decrease the number of employees on its books. In a letter shared with the exchange’s team, the Winklevoss twins revealed that Gemini would be releasing 10% of its staff due to the bearish cryptocurrency market and turbulent macroeconomic climate.
The founders explained that the crypto sector is in a “contraction phase that is settling into a period of stasis”, more widely referred to as a “crypto winter”.
“This has all been further compounded by the current macroeconomic and geopolitical turmoil. We are not alone,” they added.
As far as it is known, this marks the first time the Gemini exchange has culled personnel since its inception in 2014. The founders said, that the company will now focus on products critical to its mission.
Signals of Crypto Winter
The term “crypto winter” refers to a prolonged downward trend in the cryptocurrency market and general pessimism which hinders the enthusiasm of the industry.
The crypto market as a whole has lost hundreds of billions of dollars of its total market value since the beginning of 2022. Compounding this, Terra, one of the biggest DeFi ecosystems, collapsed just one month ago, bringing even greater turmoil and losses to the whole cryptocurrency market.
Bitcoin is now down by more than 56% since its November 2021 all-time high. Furthermore, it has taken on a highly positive correlation with major stock indexes, meaning that Bitcoin is considered to be more like a risk asset than a safe haven during these times of general macroeconomic turmoil.
Contributing to this are the concerning events happening all over the planet. Inflation is at its highest level of the past 40 years, and economies worldwide are still struggling to recover after the pandemic.
Russia’s war in Ukraine, and the strict economic sanctions subsequently levied against the oil-rich aggressor, has resulted in global oil supply shortages and skyrocketing prices. Monetary policies across the globe are tightening to fight inflation, and with the hike in interest rates bringing borrowing costs up, spending will eventually decrease.
As various financial experts have explained, these multitude of factors have created a challenging cocktail of issues that are likely to see the market pressure and bearish sentiments remain for some time.