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Crypto CEOs fearing worst is yet to come are cutting more jobs

Dec. 5, 2022 Updated Mon., Dec. 5, 2022 at 3:20 p.m.

A collection of bitcoin, litecoin and ethereum tokens sit in this arranged photograph in Danbury, U.K., on Oct. 17, 2017.   (bloomberg)
A collection of bitcoin, litecoin and ethereum tokens sit in this arranged photograph in Danbury, U.K., on Oct. 17, 2017.  (bloomberg)
By Philip Lagerkranser,Joanna Ossinger and Suvashree Ghosh Bloomberg

Digital assets are already a year into one of the industry’s worst slumps, but judging from recent announcements of steep headcount reductions, crypto executives seem to be bracing for more pain.

Cryptocurrency exchanges Bybit and Swyftx over the past two days said they’re laying off 30% and 35% of their staff, respectively. The announcements came less than a week after bigger rival Kraken unveiled a similar workforce culling.

With the implosion of Sam Bankman-Fried’s FTX reverberating through the industry, Bybit Chief Executive Officer Ben Zhou and his counterpart at Swyftx, Alex Harper, offered frank assessments of the challenges facing the sector.

In a message to employees seen by Bloomberg News, Harper cited the potential for more “black swan-type events” and said trading volumes could suffer “a potentially sharp fall” in the first half of 2023. Zhou flagged the possibility “that we are entering into an even colder winter than we had anticipated from both industry and market perspectives.”

Exchanges are at the epicenter of the industry’s crisis because trading volumes have fallen sharply as a $2 trillion drop in cryptoassets’ market value drove retail traders away. In addition, questions about whether FTX misused customer funds to prop up Bankman-Fried’s trading house Alameda Research have led to a loss of faith in centralized marketplaces.

After a year of hacks, blowups and bankruptcies, pessimism now suffuses the sector. A roughly 70% drop in the price of Bitcoin to $5,000 next year is among “surprise” scenarios markets may be “under-pricing,” Standard Chartered’s global head of research, Eric Robertsen, wrote in a note on Sunday. That’s more than 90% below the token’s peak of almost $69,000 in November 2021.

For all the hand-wringing among digital-asset executives, perhaps the bleakest prediction for the industry comes from one of traditional finance’s biggest names. BlackRock CEO Larry Fink, a longtime cryptocurrency skeptic, said last week that he expects most crypto companies won’t survive the havoc FTX’s fall unleashed.

“I actually believe most of the companies are not going to be around,” Fink said at the New York Times DealBook Summit on Nov. 30.

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