A devastating story has emerged following major layoffs across the United States as the cryptocurrency market continues to plunge.
The once-booming world of cryptocurrency has apparently begun an unforeseen and rapid descent, marked by major staff cuts at several of the major trading companies.
A victim in the mass layoffs recently announced by the American exchange Coinbase spoke out, saying his entire career is likely to take a dive as a direct result of the business.
Hao Jia said CNN Business this week he rejected a job offer at tech company Oracle in favor of an offer in early April to become a software engineer for Coinbase.
Last week, however, he received an email letting him know he was no longer wanted for the role.
As an international student, Mr. Jia relied on the position to maintain his visa.
“I’m an international student and I need to keep my visa,” he told the publication.
“Now, after Coinbase, I prefer to go to a bigger company because I’m worried about my visa.”
Coinbase announced earlier this week that it would be laying off 18% of its staff due to an impending recession and “crypto winter.”
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He blamed too-rapid expansion and tough economic conditions for the need to cut around 1,100 positions, with co-founder and chief executive Brian Armstrong announcing the “difficult decision” in an email to staff on Tuesday.
“We appear to be entering a recession after an economic boom of more than 10 years,” he wrote.
“A recession could lead to another crypto winter and could last for an extended period. Over the past crypto winters, trading revenue (our primary source of income) has declined significantly. Although it is difficult to predict the economy or the markets, we always plan for the worst so that we can operate the business in any environment.
It came as bitcoin fell below US$21,000 (A$30,445) – approaching levels last seen in December 2020 and nearly 70% below its November 2021 all-time high of US$67,802 (A$98,299) – while the broader cryptocurrency market fell below US$1 trillion (A$1.45 trillion) from US$3 trillion (4 .35 trillion Australian dollars) at its peak, according to Coinmarketcap.
Crypto prices have been falling since November, but the correction turned into a rout last month with the collapse of the stablecoin terra, which was supposed to be pegged to the US dollar, and its sister token luna.
Several other start-ups have also made deep cuts, including Crypto.com, which laid off 260 workers, or 5% of its workforce.
Gemini Exchange will lay off 10% of its workforce, while BlockFi said it will cut 20% of its workforce.
The sell-off panic resumed this week when one of the biggest crypto lending platforms, UK-based Celsius Network, announced to users on Sunday evening that it was suspending all withdrawals, exchanges and transfers between accounts in due to “extreme market conditions”.
As bitcoin’s price plummeted, Binance, the world’s largest crypto exchange by trading volume, added fuel to the fire on Monday by announcing a temporary freeze on withdrawals “due to a transaction cancelled”.
The sharp sell-off in the cryptocurrency market comes as central banks begin to aggressively raise interest rates to combat soaring inflation, forcing investors to pull out of riskier assets and causing stock markets to fall.
Coinbase had already warned in mid-May that its number of active users was declining. The group recorded a net loss of $430 million (A$623 million) in the first quarter of 2022.
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