Key points

• Crypto.com laid off 20% and 5% this summer
• Coinbase, Kraken, Huobi and Swyftx member exchanges have already reduced their business scale in the next month
• More than 1000 people have been laid off in all high-tech industries, and Amazon platform, Salesforce, Meta and Twitter are only in many large enterprises
• The encryption industry misjudges the vulnerability to the total demand of the sales market
• The uncertainty of Bitcoin has been ignored because of the huge investment expansion of enterprises during the COVID-19

Crypto.com has become a new encryption company that has laid off employees, and announced 20% layoffs on Friday. CEO Chris Marszalek listed "current market situation and recent industry events" to lay off employees, which is consistent with the reprimand of other cryptocurrency CEOs, because the bear market in the stock market has become a victim again.

As we shared with the team today, although we performed well again, the market situation and recent industry events made the enterprise make a correct decision at this time.

-Kris | Crypto.com (@ Kris) January 13, 2023

The layoff tide swept all industries

Crypto.com is not the only exchange that has to lay off employees. Kraken, Swyftx and Huobi all cut jobs next month. Kraken laid off 30%, the Australian Exchange Swyftx laid off 40%, and Huobi laid off 20%. Coinbase also announced earlier this week that it would lay off 20% of its staff, and 18% of the staff had been laid off in June.

However, encryption enterprises are not the only ones affected. All high-tech industries are hesitant. Amazon, Twitter, Meta and Salesforce are only a few enterprises that have reduced more than 1000 employees.

The high-tech industry is generally recognized as volatile. In the past year, it has been hurt by rising interest rates. Because so many technology limited companies can not achieve efficiency improvement, the company's valuation is generally based on future cash flow exchange. When the interest rate is zero, this causes the overvaluation of all industries.

However, with the spiraling rise of inflation, central banks have to significantly increase their annual interest rates. This reduces the use value of the exchange cash flow and reduces the enterprise valuation.

Infectious diseases in cryptocurrency industry

However, cryptocurrency is facing different types of struggle against the macroeconomic climate. Sarezalek's "recent industry events" are not without scandal, but the latest one is the shocking collapse of FTX.

The exchange, together with Coinbase and Binance, was listed as one of the top three exchanges, and its bankruptcy caused a new wave of diffusion in all industries.

Despite the loss of $8 billion in customer property in the FTX scandal, the collapse of Luna in May is likely to be more devastating. After all, after the death spiral of its unstable stable currency, UST, the one-time ecosystem of $60 billion is in despair.

This caused a series of bankruptcies and crashes in all industries, including Celsius, a cryptographic loan company, and Three Arrows Capital, a financial derivative.

This scandal sent prices tumbling. With the reduction of price, trading volume and interest rate, as well as the reversal of the macro-economy mentioned above, encryption enterprises have to reduce their operations to survive.

Crypto.com is expanding faster and faster

This accusation is not limited to Crypto.com. In the midst of the COVID-19 pandemic bull market, the exchange expanded too fast.

"The opening of new territories in early 2022 is based on an amazing trend and is consistent with the movement track of a wider range of industries. With the convergence of negative economic growth, this movement track changes rapidly",CEO Marszalek said.

The number of consumers of Crypto.com has rapidly increased to 70 million. But in this process, it also made some mistakes. In February this year, the company was widely criticized for a Super Bowl advertisement by Matt Damon. Its campus advertising cost $10 million, and Crypto.com cut 5% of its staff only four months later, which is also the main data signal that it misjudged the sustainability of the bull market.

"The decrease in July last year allows us to withstand the macroeconomic downturn"Massalec said.

However, he added that"This does not represent the recent collapse of FTX, which has seriously affected the trust of the industry. It is precisely for this reason that when we are again committed to prudent financial accounting, we have made arduous but necessary decisions to further reduce, so that the enterprise can achieve long-term success.".

Encryption enterprise misjudged relevant features

Although such events are described as "unpredictable", considering the correlation between the industry and Bitcoin market, some investment analysts emphasize that risk management is inappropriate. The ancient history of BTC has always been recognized as ups and downs. The figure below shows how many adjustments have been made to this industry.

During the COVID-19 period, cryptocurrency finally defeated this kind of violence, which is a cheerful attitude. Finally, this is also induced. Most of the expansion is predicted on the copier with the cheapest investment.

The interest rate increase in the United States pulled liquidity out of the system, and the risk assets decreased significantly. Beyond the scope of risk, there is basically no more property than cryptocurrency.

Just look at the stock price of Coinbase in 2022, and you can see how quickly the phenomenon of crypto exchange has reversed. Since its listing in April 2021, Coinbase has lost nearly 90% of its price.

A data chart better reflects the gratitude of this exchange to the king of cryptocurrencies. This is the comparison between the stock price of Coinbase and the Bitcoin market.

This kind of correlation is extreme. The decline of Bitcoin market is related to the decline of the trade volume interest and hobby of the industry, which leads to the reduction of the revenue of the crypto exchange.

Last thought

Naturally, after that, it seems that everything is very good. Few people predict that the analysis will have such a volume adjustment. As mentioned earlier, high-tech industries other than cryptocurrency will also be punished.

Although Crypto.com did make some mistakes and misjudged their overall demand for the encryption sales market and their vulnerability to uncertainty, they are not the only one.

In the past year, the macroeconomic climate has changed dramatically, and the rate of interest rate rise is surprising. This will not be a good thing for cryptocurrency for a lifetime, even if it is the ugly things in all fields.