Coinbase announced it will be laying off almost a fifth of its workforce.
It comes amid a collapse in crypto prices. Eighteen percent of Coinbase’s full-time jobs will be cut according to an email to all employees on Tuesday.
Coinbase, which is a cryptocurrency exchange, has roughly 5,000 full-time workers. This means there will be a reduction of around 1,100 people. Coinbase shares closed down 0.83%.
Coinbase CEO Brian Armstrong pointed towards a possible recession, as well as an overall need to manage the company’s burn rate and increase efficiency.
He said that the U.S. appears to be entering a recession after more than a decade of an economic boom and that a recession would lead to another crypto winter. Crypto winter is when prices go down and remain low for an extended period, which is something that experts say we are already beginning to see.
It comes during a deep rout for Coinbase shares, as the stock went public via a direct listing last April in a boom in crypto markets. The shares are down almost 80 percent this year, and 85 percent from their all-time high.
Earlier this week, Bitcoin dropped to the lowest level it has seen since the end of 2020. One currency temporarily paused all withdrawals. This year, Bitcoin has dropped to near $22,000 and has lost 53% of its value.
There are many factors, including especially the Russian war in Ukraine and inflation, which have investors jittery.
Crypto was seen by some originally as a potential hedge against inflation. But many are saying that this was always in the cards and that they can actually be riskier than standard stocks and bonds.
Fears of a recession have been growing as of late. This week, the stock market tumbled into bear territory, fueling fears that a recession is upon the U.S.
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