Amid crypto winter, Coinbase lays off 20% of its staff

The crypto winter is apparently not over yet. Coinbase announced on Tuesday that it was laying off 950 people, about 20% of its staff. The job cuts come just months after another massive round of layoffs. The cryptocurrency exchange laid off 1,100 people in June, about 18% of its staff at the time.

Coinbase, like many other publicly traded and private crypto companies, has been hit hard by the massive drop in the price of bitcoin and other cryptocurrencies. Bitcoin price is hovering around $17k after peaking near $65k in late 2021.

Some cryptocurrency fans have been encouraged by bitcoin’s solid start so far in 2023. Bitcoin is up over 4% since the start of the year, suggesting that cryptocurrency prices may have finally bottomed out.

The hope is that bitcoin and other cryptocurrency prices will start to stabilize, especially if financial regulators start providing more guidance and clarity on their stance on cryptocurrencies. It could mean that the worst is almost over.

“A large part of the capitulation movement has already been opened and the tide may turn soon,” said Naeem Aslam, chief market analyst at AvaTrade, in a report on Tuesday. He suggested that if bitcoin is able to rise above $20,000, it “might revive some confidence among traders.”

Still, bitcoin bulls still don’t have much to celebrate. Shares of Coinbase, which went public in April 2021 and hit an all-time high of nearly $370 a share later that year, have dropped to around $40 — a nearly 90% drop from their peak.

Shares rose 4% on Tuesday after the layoffs were announced. Coinbase is now up nearly 13% so far in 2023.

Coinbase CEO Brian Armstrong emphasized in a blog post on Tuesday that the company “is well capitalized and crypto is not going anywhere.”

But Armstrong added that the layoffs were necessary because “we need to make sure we have the appropriate operational efficiencies to ride out downturns in the cryptocurrency market and capture opportunities as they arise.”

Bitcoin’s freefall led to a crisis of confidence in the industry. Several high-profile crypto companies have gone bankrupt, most notably crypto darling (and Coinbase rival) FTX.

The company led by Sam Bankman-Fried was once valued at $37 billion before declaring bankruptcy. Bankman-Fried, or SBF as he is better known, was arrested, extradited from the Bahamas and 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 interpreted as a jab at FTX and other failed crypto companies, Armstrong said in the blog post that “dark times also weed out bad companies, as we are seeing now.”

Armstrong added that “we’ve also seen the fallout from unscrupulous actors in the industry, and there could be more contagion yet.”