July 1, 2022

Crypto Winter Is Here: What Does This Mean For The Market, And Will There Be Any Job Opportunities?

Cryptocurrency is any type of digital or virtual currency that primarily uses cryptography to secure transactions, preventing counterfeiting and payment fraud to the greatest extent possible. Unlike conventional currencies, cryptocurrencies only exist as a decentralised blockchain-based shared record of ownership.

Since its inception, the use of cryptocurrency has grown at a rapid pace, especially in the progressing Web3 world. Because there’s no central issuing or regulating authority, the crypto market is known to bring about massive changes in the world of financial operations and transactions.

Nonetheless, even with so much opportunity and exploration on Web3, the volatility of cryptocurrency is no secret, and the crypto crash that occurred in the middle of 2022 has been widely discussed, analysed, and reported. According to Crypto News BTC, the wild price swings were exacerbated by the TerraUSD and Luna meltdowns, which are estimated to have wiped half a trillion US dollars (approximately €500 billion) off the sector's market capitalisation.

Plus, as evidenced by the industry's frostbite since last month, there's talk that a crypto winter has already set in. The term "crypto winter" is used frequently to describe a bearish cryptocurrency market. The last crypto winter, during which cryptocurrency prices declined and stayed low, lasted from early 2018 to mid-2020. And, it's happening again right now!

So, What Happened Exactly To Cause The Recent Crypto Crash?

It's all over the news right now that the markets are suffering, and crypto is taking a particularly hard hit. Consider the first cryptocurrency, bitcoin, which accounts for about a third of the market's value. Since the end of March, the price of a single bitcoin has been gradually falling, along with a general downturn in the tech industry.

Then, in early May, it fell even more than it had in the previous month. In addition to bitcoin's negative impact on the overall cryptocurrency market, the other top coins, such as Ethereum, BNB, XRP, Solana, Cardano, and avalanche, have all seen even greater losses.

International Telecoms Business Magazine suggested that the five main reasons for the cryptocurrency crash, in which the lowest plunge hits an 18-month record low in overall value, are as follows:

  • The Luna-Terra crash: Cryptocurrency investors were completely shocked by this stable coin's decline. The escalating paranoia might have caused fear-driven cracks in the cryptocurrency market as a whole, and led investors to sell other crypto coins, which decreased the price.
  • The stock markets: Since the equity and stock markets, plus the cryptocurrency markets are inextricably linked, all cryptocurrency investors should keep an eye on them. Cryptocurrencies also fall in value when the stock market does.
  • The rise in interest rates: To combat inflation, the US Federal Reserve has agreed to increase interest rates. Following the announcement, there was a significant decline in both the stock market and the cryptocurrency market.
  • Regulatory hurdles: While some governments are moving toward various regulatory frameworks for cryptocurrencies, taxation, tight restrictions, or a free-market approach, much of the world still lacks a comprehensive legal framework to keep it in check.
  • Celsius Network: Midway through June, decentralised financial services provider Celsius Network announced that it’s blocking all cryptocurrency transactions due to "extreme market conditions." The massive sell-off that followed the closure saw a decline in all cryptocurrencies.

Here's how the current prices of the top coins compare to their daily high points over the last few months:

CryptocurrencyCurrent Price (29 June)One Week Ago (19 June)One Month Ago (29 May)3 Months Ago (27 March)
(Source: Investing.com and coinmarketcap)

Compared to three months ago, the prices for the five main cryptocurrencies above have fallen significantly. This demonstrates that crypto winter is currently in effect, as crypto assets are losing value in comparison to prior highs.

Was The Crypto Crash Related To Existing Economic Turmoil?

According to The Guardian, the crypto crash could be linked to ongoing economic turmoil, such as the recent drop in the price of technology stocks as a whole. The decline is the result of high inflation reducing the appeal of high-growth, low-profit investments; as well as a string of scathing revelations from the largest corporations, raising fundamental doubts about the extent of their potential future growth.

The limited supply of bitcoins, which makes them an effective inflation hedge, may lead supporters to portray their currency as a sort of "digital gold. In reality, however, the possibility of a digital revolution decreases as growth prospects worsen, inflation increases, and bitcoin prices plummet.

Moreover, the sector is being harmed by retail investors, who may be treating the crypto market as a platform for day-trading rather than a long-term investment to hold value. They learn to take advantage of the crypto volatility, and will quickly sell their coins if they see a daily increase in price.

Crypto traders must also pay attention to the movement of whales (i.e. people who create waves that cause a ripple effect among small traders), who can manipulate the market by increasing and decreasing prices. As reported by Analytics Insight, Ethereum whales have been making headlines since the recent crypto crash. Mostly because, despite being Ethereum whales they were mostly hoarding Shiba Inu and other cryptocurrencies such as FTX Token, Chainlink, Cardano, and Axie Infinity.

Will The Crypto Crash Have Any Impact On The Regular Economy And Conventional Financial Institutions?

Due to the unregulated nature of the cryptocurrency market, there’s currently no declared direct connection between it and traditional financial institutions. And, while it’s evident that the regular economy can influence the movement of cryptocurrency, the reverse is not true. Thus, it’s unlikely that the crypto crash will have any effect on them.

The Guardian specified that the conventional financial sector has mostly avoided the cryptocurrency industry, and if they do consider venturing into it, they have done so with caution and have treated it as an investment opportunity with a commensurately high level of risk. Even if the entire sector vanished overnight, the potential for contagion (i.e. spread of an economic/financial crisis) would be limited.

The scenario example given is that, although the knock-on effect would have a significant impact on some conventional stocks (and investors in venture capital funds like Andreessen Horowitz's recent $4.5 billion round of investment in cryptocurrency companies may be wiped out), the systemic effects are highly unlikely.

However, the cryptocurrency market is still worth more than US$1 trillion, and losing that much money has a significant detrimental effect as a whole – even if it doesn't cause a bank failure on the scale of the Lehman Brothers collapse. It might start or intensify a recession, or it might cause another wave of more common issues like bankruptcies, insolvencies, and mortgage foreclosures.

Having Said That, How Is The Current Job Market In The Cryptocurrency Industry?

There are two sides to what is happening in the crypto sector's employment market: The good and the bad.

Read more: Thinking Of Switching Careers To The Web3/Crypto Space? Here’s What You Need To Know!

The unfortunate news

As players prepare for a rougher ride ahead, the prolonged decline in cryptocurrency prices has resulted in an increasing number of layoffs and hiring freezes at crypto firms. Here are the cryptocurrency companies that have so far stopped hiring or reduced employee numbers:

  • Early in June, the Winklevoss brothers' crypto exchange and custodian Gemini announced job cuts of about 10% of its workforce, citing "turbulent market conditions that are likely to persist for some time."
  • Soon after, the Middle Eastern crypto exchange Rain Financial revealed that it was laying off dozens of employees due to the difficult market.
  • Coinbase Global (COIN), the largest publicly-traded US crypto exchange, reiterated that it would be extending its previously announced hiring pause, and even rescinded accepted job offers as part of cost-cutting manoeuvres in the face of tough market conditions.
  • Buenbit, an Argentina-based crypto exchange told CoinDesk that the company has laid off 45% of its workforce, with CEO Federico Ogue stating in a Twitter thread on Monday that the decision was made due to the "global overhaul" that the tech industry has undergone, adding that the reduction plan, which the company has been working on for months, was unrelated to the recent crashes of UST and Luna.
  • Bitso, a Latin American crypto exchange, has laid off 80 employees, according to CoinDesk. The company also cited the need to "rethink the skills it requires from employees to move faster in the crypto industry" as one of the reasons for the layoffs.
  • Kris Marszalek, CEO of Crypto.com, stated in a tweet thread that the company will lay off nearly 5% of its workforce, or approximately 260 employees. The reason for this is to "stay focused on executing against their roadmap while optimising for profitability".
  • CEO Zac Prince in his tweet thread stated that lending platform BlockFi will reduce its headcount by "roughly 20%", which equates to approximately 170 people. It’s one of the measures taken on the path to profitability and cost management as the dramatic change in macroeconomic conditions took a negative impact on their growth rate.

(Sources: Fortune, CoinDesk)

The great news

Despite some businesses making unfavourable employment announcements, there’s good news for those looking to enter the crypto industry's job market, where opportunities still abound and job openings continue to soar:

  • According to Indeed, the number of cryptocurrencies, blockchain, and NFT-related jobs have increased by 804% in the last two years (from April 2020 to April 2022). Companies are actively seeking application developers, data engineers, and full-stack developers.
  • Even after the price crash, Michael Shlayen, founder of BlockchainHeadhunter told CoinDesk that "there are still some companies with healthy treasuries and lengthy runways who are continuing to hire ambitiously."
  • Binance plans to hire over 2,000 people in Europe, Asia, South America, and the Middle East. "We will continue to grow our team as planned," said Binance CEO Changpeng Zhao, "and see this moment in time as an opportunity to gain access to some of the industry's best talent."
  • Kraken is looking to hire 500 new employees, ConsenSys has 125 open positions, and Polygon has over 100 job openings, even though crypto markets are crashing (at the time of writing).
  • Chainlink Labs, Aave, and Uniswap Labs have all posted more than 80 jobs to their respective career pages (at the time of writing).

(Sources: The Indian Express, CoinDesk)

What Can We Anticipate In Light Of The Current Crypto Winter?

Because of the cryptocurrency's high volatility, anything can happen right now; when the cryptocurrency price drops significantly, it can suddenly jump right back up. Given that the cryptocurrency industry has previously endured disastrous crashes, this is not impossible.

That is what sparked discussions about the market being in a "crypto winter" phase. At this point, investors may still have some hope as they simply choose to wait it out and expect the market to thaw.

When the bull market finally appears to be coming to an end, it'll likely be a good time for cryptocurrency businesses to focus on how to get customers more enthusiastic about the market, rather than remain sceptical. That being the case, there’s a very good chance that this unfortunate event will cause the crypto industry to become even more exclusive.

Nicholas Strange, the founder of Seattle-based hiring firm Crypto Talent, told CoinDesk that, “Going forward, crypto companies with viable use cases and utility will best survive. Many crypto firms have previously experienced downturns and have improved their treasury management. Additionally, quarter-over-quarter venture capital funding remains at all-time highs, and certain VC firms may use this downturn to continue funding promising crypto-related projects."

The Possibility Of A Crypto Winter Causing Major Crypto Loss

On the pessimistic side, the crypto winter this time may be different, and possibly not many of the smaller players will survive. According to The Guardian, the majority of cryptocurrency growth has come from attracting ever-larger numbers of new users. However, the most recent fall might be so significant and widespread that it’ll difficult to find any new entrants.

Additionally, those who keep their savings in cryptocurrencies will eventually need to sell to pay for their real-world bills, but won't be able to find a buyer. If everyone in the developed world either lost money in the crypto crash or knows someone who did, the pool of unsuspecting cash to buy in the next time around will be very small.

There’s also a notion among crypto firms that thousands of digital currencies will collapse. Several cryptocurrency industry players have told CNBC that thousands of digital tokens will likely collapse in the coming years, as will the number of blockchains in existence. Bertrand Perez, CEO of the Web3 Foundation, told CNBC that one of the consequences of the Terra issue is that there are now far too many blockchains and tokens available. This confuses users and poses considerable risks to them.

Brad Garlinghouse, CEO of cross-border blockchain payments company Ripple, echoed Perez when he said that "there will likely be mere 'scores' of cryptocurrencies that remain in the future". He was of the opinion that it's debatable whether we need 19,000 new currencies right now. Guggenheim Chief Investment Officer Scott Minerd added to the pessimism by stating that most cryptocurrency is "junk," but that Bitcoin and Ethereum will survive.

There’s Hope For The Crypto Market To Get Better

The good news is that, despite the uncertainty, some investors are continuing to pour money into the sector, indicating that people still believe the crypto market will improve. For instance, Andreessen Horowitz, the venture capital firm, announced at the end of May that it had raised US$4.5 billion for its fourth cryptocurrency fund, with US$1.3 billion going to seed rounds of start-ups and US$3 billion going to venture investments.

On the other hand, blockchain investor Fortis Digital Ventures is closing a US$100 million crypto fund that aims to close the gap between the traditional and modern finance sectors by facilitating blockchain investing through asset allocation, risk management, and position sizing in cryptocurrency.

Binance Labs, the venture arm of the world's largest cryptocurrency exchange Binance, has also raised US$500 million for its debut start-up fund, with plans to invest in companies developing "Web3." All these investments could be the secret weapon against the crypto winter.

Even if the current situation appears to be dire, it may provide an opportunity for investors and crypto industry participants to learn from their mistakes, devise better next steps, or find ways to improve internally.

Masha Boone, VP of people at NFT exchange Rarible, predicted that the recent market volatility and resulting layoffs would likely continue into this summer. "However," she continued, "it’s important to recognise this as an opportunity to reflect on what is needed in the crypto space and reconsider where the industry is headed from here." Thus, the company took advantage of the upheaval to strengthen its internal development and product teams.

Concerns About The Cryptocurrency Market Persist

There are no guarantees when it comes to crypto investing in the coming months or years because of its unregulated and volatile market. And many concerns remain, including:

  • Crackdowns in countries like China
  • Calls for greater regulation across the globe
  • Environmental concerns
  • Security issues and hacks
  • Their price is based solely on speculation

(Source: The Times)

Furthermore, National World reported that Kevin Brown, a savings and investment specialist at Scottish Friendly, advised against investing for anyone who doesn't understand the market, even though the price of Bitcoin has increased by 65,800.91% since February 2014.

He stated, “The level of volatility means that savers who choose to invest in cryptocurrencies must be prepared to lose all their money.”

Is It Still Worthwhile To Consider A Job In The Crypto Space, And How Should One Go About Doing So?

As previously stated, despite the recent crash and numerous layoffs, there are many job openings in the crypto market, and anyone meeting the necessary qualifications should still consider applying. According to Cointelegraph, while Silicon Valley has faced a string of firings, crypto jobs are still growing rapidly.

Neil Dundon, the founder of Crypto Recruit, told Cointelegraph that hiring in the cryptocurrency industry has not slowed down and that business is brisk as ever. He added that previously, when the price of Bitcoin falls, hiring in the cryptocurrency industry tends to halt immediately. The hiring market is stabler now that cryptocurrency companies are managing their treasuries in a much more responsible way.

This indicates that demand for jobs in the sector is still rising, and a lot of job seekers continue to view the sector as one with room to grow. It's important to note that the crypto sector outperformed the broader tech sector, which also experienced remarkable growth and saw a nearly twofold increase in job postings.

Plus, it can be financially rewarding to work in the cryptocurrency and blockchain sectors. For instance, the average Web3 non-tech salary ranges from US$74,000 to US$115,000 annually, whereas the average Web3 developer salary ranges from US$100,000 to US$142,000 annually.

Finding a job in the crypto world, however, might not be as easy as doing so in the economic mainstream. CoinDesk revealed what it takes to land a sought-after job in the cryptocurrency industry, which are:

  1. Conduct research to identify the most ideal project, company, or organisation.
  2. Get involved for the right reasons by finding one that suits an individual’s interest.
  3. Demonstrate value to the crypto community to be on the job radar.
  4. Be wary of the risks associated with the industry's inherent volatility.
  5. Use the right resources, such as PompCryptoJobs (a dedicated job board for positions in the crypto industry); Web3.career (a crypto job board with aggregated salary data across the industry); Discord (the preferred messaging platform of many cryptocurrency projects), and Glassdoor (a job board that provides users with reviews of companies from current and former employees).

It's also advisable for novices interested in crypto work to try getting an internship, volunteering, writing, tweeting (as many crypto big players do), using other social media platforms, as well as participating in crypto events and clubs. Simply ensure that all your activities are crypto-related!

What Are Some Of The Top Skills And Necessary Experience Needed To Find A Job In The Crypto Space?

To begin with, one must be passionate and ever-curious to enter or remain in the rapidly evolving crypto sector. The industry provides opportunities for both technical and non-technical roles, with each job position requiring specific skills and experience. While they may not be the same, the top skills required to enter the crypto job market are as follows:

Hard skillsSoft skills
Understanding blockchainWillingness to learn
Coding and smart contractsCreativity
Data analysisCommunication
Cryptography and securityCollaboration
UX design and web developmentAdaptability

Landing a job in crypto also necessitates demonstrating some experience that reveals a level of understanding of the market, and the ability to navigate through the space. The best way to proceed is to simply go on there and engage in various cryptocurrency activities such as leveraged trading, flipping NFTs, collateralising assets and borrowing, yield farming, plus many others.

Another way for employers to learn about a person's crypto experience is through the individual's on-chain resume, which is essentially an e-wallet. This on-chain resume will demonstrate involvement in the crypto world by providing information such as blockchain activities, content creation, previous investments made, and NFT collection.

Famous People Who Left Their Previous High-Powered Jobs For New Roles In The Web3/Crypto Industry

As evidence that working in the crypto sector provides the best future job opportunities, the best talents and high-profile employees from Big Tech are transitioning into crypto, blockchains, and Web3. Here is a list of some of the significant individuals who have transferred.

  1. Google’s former vice president, Surojit Chatterjee, now serves as Coinbase’s chief product officer.
  2. Amazon’s Pravjit Tiwana left his position as general manager of AWS Edge Services to become the chief technology officer at Gemini.
  3. Lyft’s former chief financial officer, Brian Roberts, joined the non-fungible token (NFT) marketplace OpenSea.
  4. The former head of gaming at YouTube now leads Polygon Studios as its CEO.
  5. Twitter’s Jack Dorsey, has stepped down from his position as the company’s CEO to focus on his crypto-oriented payments company, Block (formerly known as Square).

Furthermore, a study shows that 94% of cryptocurrency investors are members of Generation Z or Millennials, a group that is more likely to view cryptocurrencies as potential sources of retirement income and even employment.

It's Crucial To Know How To Manage In The Unstable Cryptocurrency Market

Exploring and working in the crypto space can result in a lucrative return in addition to gaining a wealth of new knowledge and information daily. However, the volatile market brings with it a slew of risks that may or may not be avoidable. Be prepared with the following tips to be able to handle the uncertainty that can come knocking unexpectedly:

To safeguard jobs in the industry:

  • Be flexible and adaptable
  • Pay attention to changes
  • Be a team player
  • Get along with superiors
  • Strengthen job networking

To find a career in the industry

  • Upskill on technology
  • Update digital profile
  • Explore all potential career options
  • Search through network
  • Structure job search

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