The values of cryptocurrencies are dropping on Thursday as the industry continues to go through some major growing pains. As values drop, companies start to lay off workers, which cuts into enthusiasm for cryptocurrencies and a downward spiral begins.
As of 11 a.m. ET, the value of Bitcoin (BTC -2.33%) was down 3.3% in the last 24 hours, Ethereum (ETH -2.59%) was down 5.2%, Solana (SOL -8.44%) had dropped 7.2%, and Dogecoin (DOGE -1.89%) was down 4.3%. From peak to trough, the cryptocurrencies were at one point down 6.1%, 7.9%, 13.1%, and 7.6% respectively.
There were a few fairly bearish news items out about cryptocurrency generally in the last day. One was Solana’s outage, which happened yesterday and was the third long outage in the past year. Developers found that increased usage of “durable nonce transactions” led to the blockchain’s timing mechanism breaking down. They’re expected to find a patch, but in the meantime some transactions won’t be supported.
Crypto exchange Gemini also said 10% of its staff will be let go following the turbulence in cryptocurrencies. The move is notable given that publicly traded Coinbase Global announced last month that it would slow hiring, indicating that it was still in expansion mode, albeit slower expansion than previously expected.
Cryptocurrency values have bounced off their lows in early trading Thursday in part because the stock market is moving higher as well.
It’s not surprising to see companies related to cryptocurrency start to lay off people given the large decline in the market. And it’s likely private companies, which have less financial stability than a company like Coinbase, will start to lay off workers first.
At the same time, traders who were once bullish on cryptocurrencies have turned the other direction and may be leaving the market altogether. That’ll pull values lower as well.
On the bright side, billions of dollars are being invested in cryptocurrency and Web 3.0 start-ups that will be bringing innovations to the market for years to come. That should lead to increased activity on the blockchain as more people are onboarded and the number of uses cases for blockchain technology increases.
Long-term, I’m bullish on all of these cryptocurrencies, but that doesn’t mean that values will recover quickly. The last time cryptocurrency values crashed, it was known as the crypto winter of 2017 and it took years for values to bounce back. We may be in for a similarly long downturn, but for investors willing to buy and hold the assets being used to generate utility for users, there’s a lot of potential for growth.