Gemini, a digital asset exchange controlled by the Winklevoss twins and worth billionaire, is planning to cut about ten percent of its workforce. This is the latest indication of how the rapid growth of the industry has been disrupted by the dramatic drop in crypto markets.
According to data from the Financial Times, the digital asset market’s value has fallen by $2tn since its peak in November 2021 to $1.3tn.
“This is where you are now, in the contraction stage that is settling into an extended period of stasis, which our industry refers as ‘crypto Winter’,” said Cameron Winklevoss and Tyler Winklevoss in a note for employees. This was first reported on Bloomberg.
Bitcoin’s November high of $52 has been beaten by a drop of more than 50%. However, smaller coins have suffered much greater losses. The crash of the once-popular luna tokens and terra tokens last month has shattered traders’ trust in crypto lending programs such as’staking,’ which previously offered lucrative returns.
Analysts and executives from exchanges have stated that crypto traders are more likely to bet on the market rising than they are when it is falling. Crypto trading volumes have fallen sharply due to the severity and breadth of the bear market.
According to data from The Block Crypto, spot trading volumes on major exchanges averaged $750bn per month in this year. This compares with $1.2tn in 2020. The fees that exchanges receive from facilitating transactions are lower when they have lower volumes.
In 2014, the Winklevoss brothers founded New York-based Gemini. They stated in a note to employees that the problems facing the crypto market had been ‘further compounded’ by the current geopolitical and macroeconomic turmoil.
When central banks and governments released liquidity to the global economy, the crypto industry boomed. People around the globe were locked in their homes during rolling lockdowns. Investors have been avoiding speculative assets in recent years, with unprofitable tech companies being under pressure and other risky investments also coming under severe scrutiny as global central bank action against inflation.
Some investors believe that the crypto downturn is temporary and that new innovations like blockchain digital ledger technology can reshape finance.
Andreessen Horowitz, a venture capital firm, launched a $4.5 billion cryptocurrency fund earlier this month. It said that the crypto industry was entering a new era in which there would be ‘new talent’, a viable infrastructure and community knowledge.
The Winklevoss brothers echoed that sentiment and told their employees, whom they called ‘astronauts,’ that the crypto revolution’ was well underway and that ‘its effect will continue to be deep’. They also pointed out that the current gloom over the crypto market is unlikely to end soon.
“We asked our team leaders to make sure they focus on the most important products for our mission and to assess whether their teams are able to handle the current turbulent market conditions that will likely to continue for some time,” they stated.