Crypto layoffs rose 8 to 13 times above average, in the months after major fallouts in 2022 and 2023.
Layoffs at cryptocurrency companies jumped in the months of June 2022, November 2022, and January 2023, following two major fallouts in 2022.
In May 2022, the crash of Terra Luna caused significant damages to the cryptocurrency market and industry, with domino effects on major entities including Three Arrows Capital, Voyager and BlockFi. The Terra Luna crash sent crypto layoffs spiking to 3,003 in June, which exceeded the average monthly rate by 13.4 times, and was the year’s highest record in a single month.
Companies in the industry faced added pressures in early November 2022, when Sam Bankman-Fried’s cryptocurrency exchange FTX collapsed and led to further contagion effects. In the same month, 1,805 employees were retrenched from cryptocurrency companies, or 8.0 times above the average monthly rate. As investors rushed to withdraw their funds, centralized cryptocurrency exchanges alone accounted for 82.2% of the month’s retrenchments.
Crypto layoffs fell to 649 in December 2022, likely because companies were less inclined to reduce headcount during the holiday season. Nevertheless, the December downsizing amounted to almost threefold the average monthly rate.
Companies in San Francisco, Dubai and New York were among the hardest hit by crypto layoffs in 2022.
In January 2023 alone, crypto layoffs have already reached 41% of the total layoffs in 2022
Redundancies jumped again at the start of the new year, reaching 2,806 in January 2023. This represented 12.5 times the average monthly rate, and was the second worst month for crypto layoffs. Cryptocurrency exchanges again accounted for 84.8% of the month’s headcount reductions, as lower trading volumes affected revenues.
The number of crypto employees laid off in January 2023 alone represents 41% of the industry’s layoffs for the entire 2022. This potentially puts 2023 crypto layoffs on track to surpass last year’s, as the crypto bear market and tough global macroeconomic conditions continue to squeeze companies’ bottom lines.
Crypto layoffs stayed in line with the broader technology layoffs in 2023
In spite of high profile crypto fallouts in recent months, crypto job cuts matched technology layoff trends thus far in this year.
In 2022, crypto accounted for 4.3% of tech layoffs and ranked 10th. This remained largely unchanged in 2023, with crypto making up a slightly smaller 4.0% of January 2023 tech layoffs, and still holding the 10th position based on cumulative numbers.
Methodology
The study examined cryptocurrency layoffs in each month from February 1, 2022 to January 31, 2023, based on layoffs.fyi and public reports. The data excluded layoffs from non-cryptocurrency companies that had crypto-related projects.
The average monthly layoffs rate of 223 was calculated based on a trimmed mean, which excluded the top outliers of June 2022, November 2022 and January 2023.
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Curious to find out more about our previous research studies? Check out this one we did on cryptocurrency hacks and exploits reaching a high in 2022.
Yuqian is a cryptocurrency writer and marketer who specializes in mainstream cryptocurrency insights. She's especially fascinated by the philosophical and socioeconomic aspects of crypto and also goes by the name of Q. She holds a Bachelor of Social Sciences with Honors from the National University of Singapore. Follow the author on Twitter @solosbrqt
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