Cryptocurrency exchange Coinbase is to lay off almost a fifth of its staff due to the collapse of Bitcoin and other digital currencies in recent weeks.
Announcing 1,100 lay-offs, Brian Armstrong, chief executive, said that a new 'crypto winter' was imminent, adding the business had grown too fast since the start of 2021.
“We appear to be entering a recession after a 10-plus year economic boom. A recession could lead to another crypto winter, and could last for an extended period,” he said.
“It is now clear to me that we over-hired,” he said.
Bitcoin today was languishing at $20,83, its lowest for almost six months after another beating on Monday that saw widespread liquidations of crypto market positions.
The digital currency has shed two-thirds of its value since its high of US$69,000 in November with the latest downward leg sparked by rising US interest rates and a rash of margin calls.
Coinbase was valued at US86bn in April 2021 when it floated on Nasdaq, but has since dropped in value by 85%.
Other cryptocurrency firms have also been drawing in their horns over the past few days with Binance, the world’s largest crypto exchange, halting trading in Bitcoin briefly.
Another crypto lender Celsius also stopped all activity on Monday due to what it said were “extreme market conditions”.
The next company of concern is MicroStrategy, which according to Bloomberg has lost nearly $1bn on Bitcoin-denominated loans prompting speculation of a huge dump of the digital currency to meet its own margin calls.