The hard times could be a harbinger for everyone else.
of its staff earlier this month. Collectively, more than 2,000 employees of crypto startups have lost their jobs since the start of June—about one-fifth of all startup layoffs this month.
The conversation around crypto companies has changed abruptly in the past year. In 2021, they were the darling of venture capitalists, who showered them with billions of dollars to fund aggressive growth. Coinbase, which went public in April 2021 at $328 a share, seemed to suggest an emerging gold mine in the sector. Other companies, like BlockFi, started hiring aggressively with ambitions to go public.
In today’s market, crypto startups are similarly exposed. “We could be seeing the collapse in that sector first,” says Kirsch. Crypto advocates say it’s normal to oscillate between periods of exuberance and destitution, which the industry calls “crypto winters.” Chris Dixon, a general partner at Andreessen Horowitz,in 2020. When the price of bitcoin rises, people get excited, leading to more startups, projects, and people investing in the ecosystem. When the price of bitcoin plummets—as it did this year, to a fraction of last year’s peak—some of those startups disappear.
Kirsch isn’t as convinced that the sector can survive a more significant downturn. “It could be that the prior crypto winters were just small events in the end, because everyone involved was a true believer,” he says. Now that celebrities like