The parent company of Brazilian crypto exchange Mercado Bitcoin, 2TM Group, laid off 15% of its workforce, resulting in a loss of around 100 jobs. In June 2022, the company laid off around 12% of its employees citing changes in the global financial environment. The company also attributed the lack of regulatory framework for digital assets in Brazil for the current situation. According to GlobalData, the cryptocurrency industry had 4,719 active jobs in August 2022. During March–August 2022, the cryptocurrency industry registered a 7.5% decline in the number of active jobs.
Wave of Layoffs in the Crypto Industry
2TM is not the only company that laid off workers. Many companies in the cryptocurrency industry announced layoffs as the price of digital assets plunged. Coinbase slashed 18% of its workforce in June 2022. Other cryptocurrency exchanges were also affected by the changing market conditions. Amid liquidity challenges, Celsius Network halted trading, deposits, and withdrawals for users and let go of certain staff to cut expenses. Gemini followed the trend after removing 64 employees, or 7% of its staff. In a similar vein, Bitso and Buenbit reduced staff to withstand the market downturn.
Collapse of Cryptocurrencies
Cryptocurrencies had a terrible year as investors sold risky assets across the board in response to increasing inflation. With bitcoin plunging nearly 60% and ether by 55%, the meltdown at the two large coins and the collapse of a well-known lender reduced public trust in the sector. The US dollar continued to appreciate after reaching a 20-year high. The S&P 500 and NASDAQ 100 declined as a result of the increase in the value of the dollar. The price of bitcoin, which has a strong correlation to tech stocks and tech-based NASDAQ, also decreased.
Less Volatility in Market
The prices of cryptocurrencies remained stagnant since June 2022, when prices fell as a result of the failure of the Terra stablecoin ecosystem, the bankruptcy of Voyager Digital and Celsius Network, and the closure of hedge fund Three Arrows Capital. The major cryptocurrency, bitcoin, experienced periods of lower volatility. Its average 30-day volatility, which measures how much its price fluctuates over a certain period, dropped to 2.7% from over 4% in early July 2022.
Narrow price fluctuations could be beneficial to long-term investors in conventional assets such as stocks or bonds. But that is not the case for the majority of investors and major companies in the bitcoin and cryptocurrency industries. For example, crypto exchanges make profits by charging fees for trades; as volatility declines, trading activity tends to decrease.
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