Crypto Winter is Here

“Hell, if you went to the store and milk was half priced, you’d buy more, wouldn’t you?”
I admit it, I love a good crash. Maybe it was getting hooked on Graham and Dodd during my formative years. I was always waiting for a fire sale. I wanted to be the one who was greedy when others were fearful and fearful when others were greedy.

On Thursday, billionaires Cameron and Tyler Winkelvoss announced on a blog post that the industry is in a “contraction phase” known as “crypto winter” which has been “further compounded by the current macroeconomic and geopolitical turmoil.” The creators of the crypto exchange Gemini Trust Co. announced that they are laying off 10% of their workforce, which is a first for the cryptocurrency exchange and custodian.

The twins’ memo went on to state, “we are not alone.” Coinbase, another crypto exchange reported revenue had fallen 27% versus a year ago as had overall usage. It’s been a rough go over the last several weeks for the crypto market. terraUSD, one of the most popular U.S. stable coins imploded and half a trillion dollars was destroyed in the sector. Other fintech start-ups including Robinhood and BitMEX, have also recently reduced staff.

A crypto winter is described as a multiyear bear market that occurs in the asset class. The last so-called crypto winter ran from 2018 into the fall of 2020 as cryptocurrencies plunged and layoffs abounded. While it’s unclear whether “winter is here”, dropping trading volumes on crypto exchanges is a harbinger of hard times ahead.

Gemini was established in 2014 and is valued at $7.1 billion as of its last funding round according to PitchBook. There are an estimated 10,033 people on its payroll, but the firm declined to comment on the details around the layoff beyond its blog post. In its memo, the firm said that it wants to focus only on products that are critical to its mission and that it is assessing whether teams are “right-sized” given the conditions that are “likely to persist for some time.”

Despite crypto company layoffs, VCs continue to invest in the space. Andreesen Horowitz announced a new $4.5 billion fund dedicated to blockchain and crypto companies and the companies venture arm, Binance Labs has raised $500 million for a Web3 start-up fund.