Cryptocurrencies have been on a freefall since January this year (2022), and their effects are showing in the plans of the industry to hire staff. The slump in the market could be gauged by the fact that the highest transacted Bitcoin was trading at $30,058 on May 20, not even half of its historical highs that were reached in November of last year (2021).
As the stock markets fell, crypto exchanges witnessed an even more significant slump. While the S&P 500 tanked around 18% by the middle of May this year, crypto exchanges saw a downfall of nearly 40%, triggering widespread panic amongst the crypto community.
What are the Effects?
Coinbase, which is one of the biggest exchanges for cryptocurrencies, came out with losses of $340 million for the first quarter of this year, and soon came the decision to go slow on its recruitment plans. On May 12, 2022, it said it would not triple its workforce in 2022 and wait for the markets to cool down before starting Hiring.
Emilie Choi, Chief Operating Officer, Coinbase, wrote on the official blog: “Heading into this year, we planned to triple the size of the company. Given current market conditions, we feel it’s prudent to slow Hiring and reassess our headcount needs against our highest-priority business goals. Headcount growth is a key input to our financial model, and this is an important action to ensure we manage our business to the scenarios we planned for, specifically the potential ‘Adjusted EBITDA’ we are aiming to manage.”
Collateral Effects on Other Industries
The hiring downtrend is not limited just to the cryptocurrency industry but across the tech sector. Uber and Meta are some of the big names that have reduced spending on hiring this year as the markets saw a cooling off of tech stocks that were flying high last year.
Robinhood, a US-based investment firm that offers commission-free trading of stocks, bonds, and cryptocurrencies, announced in April 2022 that it is laying off 340 employees (9% of its staff). It saw phenomenal growth in 2020 and 2021 because of the effects of Covid, low-interest rates, and stimulus packages announced by different governments. That left a lot of time and cash in the hands of the people, many of whom started trading in cryptocurrencies, taking valuations to unimaginable highs.
But the downturn has started as the world is coming out of the debilitating effects of the pandemic, and life is returning to normal. Analysts point toward an even more significant slump in the crypto market, especially in the NFT segment. However, at the same time, multiple countries are attempting to enable a crypto-economy which may turn out to be a silver lining.
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