The cryptocurrency industry was already having an awful year well before the collapse of the FTX cryptocurrency exchange on Nov. 11.
The US$40 billion implosion of the Terra-Luna stablecoin in May bankrupted several exposed lending platforms and kicked off waves of job cuts, with some in the industry saying the demise of FTX is also linked to the Terra debacle.
Now, the layoffs and firings have picked up speed as another raft of businesses exposed to FTX are shutting shop or retrenching, and by some estimates tens of thousands of people have been thrown out of work.
The question is has the industry hit bottom or will it get worse? Recruitment agencies add that salaries are falling as fast as the pace of job losses.
A graphic of job cuts across the entire technology industry by online publisher Visual Capitalist, which includes many crypto companies, shows job losses were around 20,000 a month from May, dipping to 10,000 in September. But they surged to almost 60,000 in November when the likes of Meta, Amazon and Twitter slashed head counts.
For some crypto exchanges, the job cuts are running as high as 40%.
U.S.-based Kraken said this month it was laying off 30% of its workforce, or 1,100 people, to “adapt to current market conditions.” Singapore-based ByBit followed a few days later on Dec. 5, saying it was cutting 30% of positions to “navigate the market slowdown.” ByBit had cut 30% of its staff in June.
“It’s not good news at the moment,” said Neil Dundon, founder of Australia’s CryptoRecruit, a job agency specializing in cryptocurrency positions.
“We seem to be either at the bottom of the cycle or heading towards the bottom. We’re seeing 30 – 40% staff reductions across most crypto companies.”
Many businesses expanded too quickly during the heady period of the bull run of 2021, and are now having to adjust quickly as market fortunes have reversed, Dundon told Forkast in an interview.
“I’m actually, frankly, pretty surprised a lot of these companies have even held on to staff this long,” he said, “because there’s just very, very, very little liquidity and there’s just been disaster after disaster in the crypto markets over the last six months.”
He added that the focus on job losses can miss the fact that salaries are falling at an equal pace, so those lucky to find other jobs in the industry will need to lower compensation expectations, he said.
As Dundon points out, the job losses are hitting across the board because liquidity evaporated, regardless of whether a company had any exposure to FTX.
That was a point made by Australia-based cryptocurrency exchange Swyftx Pty Ltd, which cut 40% of its staff, or about 90 positions, on Dec. 5.
Swyftx co-founder and Chief Executive Officer Alex Harper said the company had no direct exposure to FTX, but was not immune to the widespread fallout from its bankruptcy and that the cuts were to prepare for the worst.
“That’s the key thing about crypto, it’s a marathon, it’s not a sprint,” said Mark Hiriart, Head of SaaS (software as a service) Distribution at Hong Kong-based digital asset platform OSL.
“When you see firms trimming workforces, which is always unfortunate, I think it’s prudent for those firms to be doing so because ultimately they want to survive and be around for the next cycle and the next run.”
Hiriart added that while he doesn’t think any sector within the industry is insulated from the slump, it does also bring with it new opportunities.
While cryptocurrency has largely been a retail-driven phenomenon, the shake-up in the market this year doesn’t seem to have deterred institutional interest in the underlying blockchain technology, Hiriart said
This takes the form of tokenization of assets, including the potential in carbon credits and on to stablecoins.
“You might see some retail contraction, but you’re [also] seeing institutional expansion simultaneously under the hood, which is, I think, pretty encouraging,” he said.
Despite the institutional interest, however, Hiriart says the industry’s reputation has suffered.
The percentage of Americans with a positive view of crypto fell to 8% in November, down from 19% in March, according to a survey of 800 people conducted by CNBC in late November.
“Yes, sentiment definitely took a hit,” he said. “But I also think in a weird sort of way, it’s kind of needed… The sooner these bad actors are removed from the industry — if they are up to no good — it’s better for us all in the long term,” said Hiriart.
Dundon said job prospects won’t improve until the market does, and he doesn’t see that happening until interest rates come back down and broader concerns about economies and growth start to ease.
“My guess is between March second quarter next year we should start to see that uptick,” he said, adding that crypto companies are much more nimble in hiring so openings should pick up quickly once the market rebounds.
What might slow a crypto job market recovery is a shortage of technical staff and engineers in the blockchain talent pool, according to an August report by Seychelles-based crypto exchange OKX and professional social media platform LinkedIn.
The report, entitled ‘Global Blockchain Industry Talent Insights — Focus on Web 3.0.’, found that job demand was shifting to engineers from finance openings and that such technical staff were short in supply.
Kani Chen, Director of the Crypto-Fintech Lab at Hong Kong University of Science and Technology, agreed that demand was outstripping supply.
“We very often get contacts from industry requiring or requesting talents in blockchain areas,” said Chen in an interview with Forkast, “[and] within the university sometimes it is still difficult to find blockchain developers.”
In the meantime, it does seem to be an employer’s market.
“If a company’s got funds and they can see themselves through this bear market, there’s a great opportunity,” Dundon said. “The silver lining is that opportunity to capture some fantastic talent out there.”
Perhaps seeing the opportunity, Japan’s Hitachi Ltd. said earlier this month it plans to hire about 30,000 people over the next three years for what it called the field of “digital transformation.”