Coinbase Confirms End of Era of Insolent Growth in Crypto
The horizon remains uncertain for Coinbase.
Cryptocurrency exchanges still can’t get out of the bad patch that the crypto sector has been through for a year.
The crypto market has lost nearly $2.1 trillion from its all-time high of $3 trillion reached in November 2021. The market is now worth around $886 billion according to the company. data company CoinGecko.
Bitcoin, the most popular digital asset, has lost 75% of its value from its all-time high of $69,044.77 reached on November 10, 2021. BTC price is currently trading around $17,233.76 . The price of the crypto king has been relatively stable since 2023.
The biggest problem of young people blockchain– the financial services industry supported is not trusting. The general public’s mistrust caused by the series of scandals following the crypto craze of 2021.
‘Difficult decisions’
Last May, sister tokens Luna and UST collapsed overnight, causing billions of dollars in damage to retail and institutional investors. This disaster caused a credit crisis that forced the hedge fund Three Arrows Capital, or 3AC, is about to liquidate. Imminent crypto lenders like Voyager Digital and Celsius Network have filed for Chapter 11 bankruptcy.
This domino game has revealed the incestuous relationships and interdependence among actors of the crypto space. Customers of these platforms, who have lost their savings, are often unaware that their money is often lent to other companies.
In November, Sam Bankman-Fried’s crypto empire collapsed. This disaster is a real bomb as the trader was previously the institutional face of crypto. He rescued many companies during the credit crunch and his crypto exchange FTX was valued at $32 billion last February.
The FTX roadmap has yet to reveal all of its casualties. However, the biggest is still confidence in the crypto industry which has completely collapsed. Retail investors have left the sector, while institutional investors are much more cautious, especially since a Depression expected this year.
This is confirmed by Coinbase. The platform just announced the loss of nearly a thousand jobs. Coinbase (COIN) – Get a free report would eliminate 20% of the current workforce, or about 950 jobs.
“We need to make sure we have the right performance in place to weather the downturn in the crypto market and seize the opportunities that may arise,” CEO Brian Armstrong told employees. member at a press conference. blog post 10. “So I made the tough decision to reduce our operating costs by about 25% compared to the previous quarter, including laying off about 950 people.”
‘Pain’
Armstrong continued: “This is the first time we have seen a crypto cycle that coincides with a broader economic downturn. “When we look at the scenarios for 2023, it becomes clear that we need to reduce costs to increase our chances of doing well in all scenarios. Although it is always painful to say goodbye to colleagues, there is no such thing. There’s no way to reduce our costs significantly enough, without considering changes in headcount.”
As a result, Coinbase will be shutting down some projects.
All of these actions will result in fees ranging from $149 billion to $163 billion, the company said in a statement. regulatory records. These fees are primarily severance pay and other termination benefits and will be included in the results for the first quarter of 2023.
The crypto firm also said that it expects adjusted EBITDA loss for the full year to be within the previous $500 million “handrail” set last year.
The new job cuts are Coinbase’s second wave of job removals in less than a year. Last June, the company cut 18% of jobs, or 1,000 people laid off.
These layoffs mark the end of an era of excess and insolent growth for the crypto industry that has benefited Coinbase. The platform went public in April 2021. As a result, the stock skyrocketed to $341.
But they fell sharply last year. Currently the stock price is around $38, which means a drop of 89%.