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

Zurich – 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 themselves for more pain.

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

With the implosion of

Mr Sam Bankman-Fried’s FTX

reverberating through the industry, Bybit chief executive Ben Zhou and his counterpart at Swyftx, Mr Alex Harper, offered frank assessments of the challenges facing the sector.

In a message to employees seen by Bloomberg News, Mr 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. Swyftx has no direct exposure to FTX.

Mr 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 epicentre of the industry’s crisis because trading volumes have fallen sharply as a US$2 trillion (S$2.7 trillion) drop in crypto assets’ market value drove retail traders away.

In addition, questions about whether FTX misused customer funds to prop up Mr Bankman-Fried’s trading house Alameda Research have led to a loss of faith in centralised marketplaces.

After a year of hacks, blow-ups and bankruptcies, pessimism now suffuses the sector. A roughly 70 per cent drop in the price of Bitcoin to US$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 is more than 90 per cent below the token’s peak of almost US$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 long-time cryptocurrency sceptic, said last week that he expects most crypto companies

will not survive the havoc FTX’s fall unleashed.

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