The crypto market frequently uses comparisons to bears and bulls to indicate the market’s condition. A bull will usually raise its horns upward when it attacks, while a bear will stretch its head below. And right now, our investment portfolio is going through a downward track. This means that we are in a bear market.
Crypto exchanges and traders alike have felt the heat of the current bear market, which has seen several cryptocurrencies hit all-time lows. Bear markets can be especially nerve-wracking since you have to watch helplessly as the value of your portfolio slowly drops.
In the past five to six months, the cryptocurrency market has had more than a 60% decline. Due to growing market vulnerabilities, prominent cryptocurrencies like Terra, Bitcoin, and Ethereum have lost a huge chunk of their overall value and are still losing market share. Reports state that the market capitalization of all cryptocurrencies combined is currently nearly ten times lower than its maximum value in 2018.
In terms of capital destruction, the current #crypto bear market is already much worse than the previous one.
More than 2 trillion evaporated. In the previous bear market, about 700 billion USD equivalent got eliminated.
— C3|Nik (not investment advice) (@C3_Nik) June 28, 2022
A Decline in Trading Volume
The two biggest cryptocurrencies, Bitcoin and Ethereum, are miles away from their best seasons. Their decline crippled many aspects of the market, especially crypto exchanges. Investors have suffered a lot of losses since the bear market began. As a result, they have switched from risky digital assets to more centralized and conventional forms of investment assets. Trading volumes have drastically decreased, placing severe financial risks on cryptocurrency exchanges and platforms.
Although it is still unknown when the current bear market trend in cryptocurrencies will end, it is clear from the state of the exchanges that investors are gradually losing interest in buying digital assets as prices continue to fall sharply. Some of the top crypto exchanges are dealing with significant financial risks due to the turbulent market conditions.
As the two-year winning streak gives way to a colder market season, major digital asset exchanges are laying off hundreds of employees in an unexpected turnaround from the industry’s fast rise.
Coinbase, a U.S.-listed company, joined rivals Gemini, Crypto.com, and BlockFi in announcing plans to reduce the number of staff by nearly a fifth of its workforce. This makes up more than 1,000 employees. The company cited reduced trading activity as the reason for this move. During the crypto boom, Coinbase increased its workforce from 3,730 to over 6,000.
The downturn coincides with a broader decline in all global financial markets. But it has been particularly pronounced as central banks are reducing the stimulus they increased in 2020.
During bull markets, cryptocurrency investors typically trade considerably more frequently. The once-hefty fees exchanges collected from facilitating trading are now being eaten away by declining volumes. Data also shows that, from March to May, spot trading volumes across top crypto platforms averaged around $800 billion per month. This is less than half the level for the same period in 2021.
Crypto Exchanges Hit Hardest by the Bear Market
Several crypto exchanges were forced to find new measures to survive. Some incurred losses due to recent collapses related to Terra and 3AC. Here are a couple of exchanges currently facing downtime.
Coinbase has the reputation of being one of the biggest U.S. cryptocurrency exchanges. The company, however, had to lay off about 1,000 employees as a result of the present market conditions. The firm’s executives put the blame on the potential for a recession and a decrease in client fees as they work to reduce additional operating costs.
Gemini is a well-known cryptocurrency trading platform. It recently disclosed plans to fire a sizable portion of its workforce as a result of bad market conditions. There are reports that the Gemini Trust company laid off 10% of its workforce as a result of the current crypto bear market situation. According to Gemini, the platform will emphasize the products that are presently more crucial to the expansion of the company.
Like others, Crypto.com has chosen to let go of around 5% of its workforce. The firm took this action to ensure its future. The company is making use of its most powerful assets and getting ready for the next bull run in the crypto market.
That means making difficult and necessary decisions to ensure continued and sustainable growth for the long term by making targeted reductions of approximately 260 or 5% of our corporate workforce.
— Kris | Crypto.com (@kris) June 11, 2022
Bitpanda is another crypto exchange to restrategize amid the current decline. The company recently revealed its intention to reduce the number of its employees. This move may have come as a precautionary measure. Bitpanda once had over 1,000 employees, but it is currently thought to only have roughly 700 left. Along with that, the exchange platform withdrew a number of job offers in an effort to address its current financial issues.
Experts believe that if the bear market continues much longer, many of these firms might have to reduce their operations to the barest minimum. In worst-case scenarios, some might file for bankruptcy. This has been arguably the worst bear run in crypto history.
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