CRYPTOCURRENCY — Coinbase Global, Inc., also referred to as “Coinbase,” is one of the biggest cryptocurrency exchange platforms in the world. Since its inception in 2012, the company has enjoyed an undeniably dominant position in the industry for ten years now. In fact, the term “Coinbase effect” was coined as a reference to the sudden rise of a particular cryptocurrency’s coin or token price after its trading has been made available on Coinbase.

Prior to the massive financial market downturn in the first half of this year, Coinbase, along with the general cryptocurrency market, has enjoyed the most extensive bull run in its history. However, since the adoption of the Federal Reserve of a tightening monetary policy and the subsequent continued rise of interest rates and the current expectations of upcoming aggressive Federal Reserve interest rate hikes, the current grim market condition continues to drag lower risky assets’ prices such as stocks and cryptocurrencies.

Coinbase To Lay off 18% of its Total Workforce

On Tuesday, 14th of June, Coinbase filed an 8-K document stating its intention to reduce a total of 1,100 employees on its payroll by the end of June this year. The company currently has a total of 6,100 employees, and the planned reduction represents 18% of its total current employees. Thus, the company will narrow down its headcount to only 5,000 starting in July.

In the company’s blog announcing the major layoff, Coinbase Founder and CEO Brian Armstrong said, “We grew too quickly.” He added, “We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter and could last for an extended period. In past crypto winters, trading revenue (our largest revenue source) has declined significantly.”

Thus, in anticipation of a recession and a crypto winter, the company decided to cut off a major source of its operating expenses amidst its falling revenue and growth-less prospect this year. This is a sharp contrast to the company’s initial projection at the beginning of the year of at least tripling its total workforce count at the end of the year as it overwhelmingly projects a massive adoption and growth of the cryptocurrency market this year – an outcome that did not materialize.

However, Armstrong remains optimistic about the company’s future, stating, “Coinbase has survived through four major crypto winters, and we’ve created long-term success by carefully managing our spending through every down period. Down markets are challenging to navigate and require a different mindset.”

The Effect of Coinbase Mass Layoff on the Market

Workforce reductions are expanding rapidly throughout the cryptocurrency industry. Just this week, Crypto.com, another major cryptocurrency exchange, and BlockFi, a huge cryptocurrency lender, both disclosed their planned reduction in their respective workforces. Crypto.com will reduce its workforce by 5%, while BlockFi will reduce its workforce by 20%.

Coinbase’s announcement fueled the stream of bitter series of events in the cryptocurrency market. The overall market has already lost 1/4 of its total value in one month, falling to $930 billion from $1.24 trillion a month ago. Furthermore, Bitcoin alone lost roughly 1/3 of its total value in just one week, currently trading at around $21,000 as of this morning, the 15th of June.