Coinbase slashes 1,100 jobs amid landmark rout in digital assets
ONE of the world’s biggest cryptocurrency companies is cutting almost one in five staff as Bitcoin prices slump.
Coinbase said it would lay off around 18pc of staff – roughly 1,100 people – with chief executive Brian Armstrong warning that a new “crypto winter” could be imminent.
It came after Bitcoin fell by another 10pc to a low of $20,834 (£17,322) yesterday morning, its lowest level since
December 2020. More than $100bn was wiped off the value of all cryptocurrencies on Monday as the market fell 11pc.
Coinbase, which lets people buy and sell Bitcoin and other cryptocurrencies, was valued at $86bn in April 2021 when it floated on New York’s Nasdaq exchange in what was seen as a landmark moment for cryptocurrency.
Shares have fallen by 85pc since then amid a downturn in both cryptocurrency prices and the wider stock market. In a note to staff, Mr Armstrong said: “We appear to be entering a recession after a 10-plus year economic boom. A recession could lead to another crypto winter, and could last for an extended period.”
He said the company had grown “too quickly”, from 1,250 at the start of 2021 to 5,000 today. “While we tried our best to get this just right, in this case it is now clear to me that we over-hired,” he said.
This week’s sell-off was prompted by Binance, the world’s biggest cryptocurrency exchange, briefly suspending trading in Bitcoin, the largest digital token globally. The company blamed a technical error. Celsius, another large cryptocurrency lender, stopped all transactions on Monday with bosses citing “extreme market conditions”. It remains frozen, with millions of users locked out of their accounts.
Cooling attitudes towards Bitcoin may be driven by the prospect of further central bank interest rate hikes to quell inflation. Cryptocurrencies have fallen amid a flight from high-risk assets as monetary policy tightens globally.
Inflation hit 8.6pc in the US last month, compared to price rises of 9pc in the UK. Ethereum, the second biggest cryptocurrency, fell around 15pc on Monday, and another 1pc yesterday morning to around $1,200.
Trillions have been wiped from the value of digital tokens since a peak last year as investors cash out.
In May, a crash was caused after two interlinked tokens, Luna and Terrausd, spiralled. Terrausd, a so-called stablecoin, was supposed to be pegged to the US dollar but its software algorithms relied on the value of Luna. When Luna entered a decline, it dragged Terrausd down. The brief unpegging from the dollar sent the crypto market into turmoil, wiping hundreds of millions.
Traders are also monitoring Microstrategy, a business intelligence company whose big bet on Bitcoin is “backfiring”, according to Bloomberg.
Microstrategy is said to have lost nearly $1bn through its Bitcoin-denominated loans, with fears arising that further drops in the currency’s price could require the business to post additional collateral, denominated in traditional currency.