According to a new report from CoinGecko, January 2023 turned out to be the second worst month in terms of crypto layoffs.
This is due to the fact that there was a new wave of redundancies recorded in January, which saw about 2,806 people lose their jobs.
The research showed that the total number of layoffs in the crypto industry recorded in the previous month could put this year on track to exceed the number last year, which stands close to 7,000.
This is due to the fact that the crypto winter and the global macroeconomic conditions are putting pressure on the bottom lines of crypto companies.
As far as the numbers in January are concerned, 84% of the total layoffs came from centralized crypto exchanges.
Researchers said that the primary reasons for the job cuts at these exchanges were declining revenues and lower trading volumes.
Some of the prominent crypto exchanges that announced job cuts in the month of January included Coinbase, Luno, Crypto.com, Blockchain.com and Huobi.
For a number of these exchanges, the reduction in headcount last month was not the first wave of layoffs.
Exchanges, such as Crypto.com and Coinbase had also slimmed down their workforce in June last year.
The co-founder and COO of CoinGecko, Bobby Ong said that there had been an aggressive expansion in crypto exchanges during the bull market run because retail investor demand had grown rapidly.
The onset of the crypto winter hit the crypto companies hard and the macroeconomic environment has also toughened.
This has resulted in layoffs because they show that crypto exchanges are unable to sustain the excessive hiring they had done previously.
January saw the crypto market recover some of its previous losses, as there was almost a 40% gain in the value of Bitcoin.
However, Ong said that it remains to be seen if any additional cost-cutting measures would be required by crypto exchanges.
June 2022 remains the month that has the record for the highest number of layoffs in the crypto industry in a single month.
A total of 3,003 jobs were cut because the industry was facing its first major crisis when the Terra ecosystem collapsed in May.
The sector saw pressure increase in November when crypto exchange FTX imploded and it took down a number of other companies.
This resulted in 1,805 job cuts. According to the CoinGecko report, 82.2% of the layoffs recorded in November had come from centralized crypto exchanges.
Nonetheless, the job cuts in the crypto sector are in line with broader job cuts seen in the technology industry, with 4.3% of all tech layoffs in 2022 coming from the crypto space.
The number reduced in January to 4% of all tech layoffs, as transportation, food technology, and consumer technology were the sectors that took the hardest hit in terms of downsizing.
Unless the macroeconomic situation improves, or the crypto market turns around, things could continue to get worse as the contagion spreads.