January 2023 has been the second worst month for crypto layoffs as a new wave of redundancies hit the industry, with as many as 2,806 people losing their jobs, according to a new CoinGecko report.
The overall number of layoffs the crypto industry saw last month may also put 2023 on track to surpass last year’s figure of almost 7,000, according to the research, as the “bear market and tough global macroeconomic conditions continue to squeeze companies’ bottom lines.”
Of those January figures, centralized crypto exchanges accounted for most of the job cuts with 84% of all layoffs, with the researchers citing lower trading volumes and declining revenues as key reasons behind the layoffs.
Exchanges make sweeping layoffs
Major crypto exchanges that announced reductions in headcount in January included Huobi, Coinbase, Blockchain.com, Crypto.com, and Luno.
For some of them, last month was not the first wave of redundancies, with the likes of Coinbase and Crypto.com first slimming their workforce in June 2022.
“During the bull market run, crypto exchanges expanded aggressively in response to the rapid growth in retail investor demand,” CoinGecko COO and co-founder Bobby Ong told Decrypt. “While crypto companies, in general, have been hit hard by the onset of crypto winter amid a tough macroeconomic environment, layoffs have revealed that exchanges, in particular, have been ‘swimming naked’ and can no longer sustain their previous excesses.”
As the crypto market recovered some of its previous losses in January, with Bitcoin gaining almost 40% in value, “it remains to be seen whether crypto exchanges will need to take any further cost-cutting measures,” said Ong.
June 2022 still tops the chart with the highest record in a single month with 3,003 job cuts as the crypto industry was facing its first major crisis of the year following the collapse of the Terra ecosystem.
There was more pressure on the sector in November following the FTX collapse and the spreading contagion, as another 1,805 employees lost their jobs. Centralized cryptocurrency exchanges alone accounted for 82.2% of November layoffs at that time, per the CoinGecko report.
Still, crypto job cuts are generally matching a broader trend in the technology sector, with crypto accounting for 4.3% of all tech layoffs last year.
This January, the number was slightly lower, at 4% of all tech layoffs, with consumer technology, foodtech, and transportation sectors hit the hardest by downsizing.