AFTER
Apparently, the winter of cryptocurrencies is not over yet. On Tuesday, Coinbase announced that it would lay off 950 employees, or about 20% of its workforce. The job cuts come just months after another big round of layoffs. The cryptocurrency brokerage firm laid off 1,100 employees in June, around 18% of its workforce at the time.
Coinbase, like many other publicly traded and privately owned cryptocurrency companies, has been hit hard by massive price drops in bitcoin and other cryptocurrencies. The bitcoin price is hovering around $17,000 after reaching almost $65,000 at the end of 2021.
So far, some cryptocurrency fans have been encouraged by Bitcoin's strong start to 2023. It has finally bottomed out.
The hope is that the prices of Bitcoin and other cryptocurrencies start to stabilize, especially as financial regulators begin to provide more guidance and clarity on their stance on cryptocurrencies. It could mean the worst is about to end.
"Much of the selloff has already started and the tide may turn soon," AvaTrade chief market analyst Naeem Aslam said on Tuesday. He suggested that if Bitcoin can break above $20,000, it could "revive trader confidence."
However, the bitcoin bulls still don't have much to celebrate. Coinbase, which went public in April 2021 and peaked at nearly $370 a share that same year, has since fallen to around $43, nearly 90% below its high. .
The stock rose nearly 13% on Tuesday after the layoffs were announced. Coinbase is up more than 20% so far in 2023.
On Tuesday, Coinbase CEO Brian Armstrong noted in a blog post that the company is "well capitalized and crypto is not going anywhere."
But Armstrong added that the layoffs are necessary because "we need to make sure we have the right operating efficiencies to weather downturns in the cryptocurrency market and capitalize on opportunities that arise."
Bitcoin's free fall has created a crisis of confidence in the industry. Several high-profile crypto companies have sprung up, including former cryptocurrency (and Coinbase competitor) FTX.
The company led by Sam Bankman-Fried was once valued at $37 billion before filing for bankruptcy. Bankman-Fried, or SBF as he is commonly known, has since been arrested, extradited from the Bahamas and is now awaiting trial in the United States.
SBF was charged with alleged wire fraud, conspiracy to commit money laundering, and various other crimes.
In what could be seen as a blow to the bankruptcy of FTX and other cryptocurrency companies, Armstrong said in the blog post that “the dark ages are also killing off bad companies, as we are seeing now.”
Armstrong added that "we have also seen the impact of unscrupulous players in the industry and there may be other failures."
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