Bitcoin Holds Steady Amid Crypto Contagion
As the crypto industry contagion continues to spread and add casualties, bitcoin is conversely looking steady.
Bitcoin, the first and most widely recognized virtual currency, is often viewed as a stand-in or proxy for the entire digital asset industry more broadly.
At its 2021 peak of $3 trillion, the crypto industry was worth more than the $2.3 trillion U.S. dollars (USD) currently in circulation.
The market capitalization of bitcoin alone during this period reached a record $1.28 trillion.
The battered alternative digital asset sector has so far limped into 2023 with a total market cap that has since fallen below $1 trillion, or well under half of the amount of USD currently in circulation and less collectively even than the peak market cap of bitcoin alone.
Although corrections are generally expected after meteoric rises of the type crypto enjoyed, the sector’s decline over the past year was even further exacerbated by scandals and bankruptcies that rattled investor confidence.
Bitcoin Eerily Subdued
As PYMNTS relayed last month (Dec. 27), the outlook for cryptocurrency in 2023 is much shakier than it was in 2022.
But despite posting a substantial double-digit loss of 65% for 2022, the world’s biggest cryptocurrency is heading into its 14th year with a 7-day volatility rating pegged to comfortably, semi-stable levels that haven’t been reported by industry observers in the past 5 years, or since October 2018 — as reported Tuesday (Jan. 10) by Reuters, using Refinitiv Eikon data.
This, as the crypto industry succumbs to a wave of blowback and increasing spillover of industry catastrophes.
“As we continue to navigate unprecedented industry challenges, Genesis has made the difficult decision to reduce our headcount globally. These measures are part of our ongoing efforts to move our business forward,” a Genesis spokesperson told PYMNTS in an email when reached for comment.
Similarly, the U.S.-based cryptocurrency exchange Coinbase said Tuesday it plans reduce its workforce of 4,700 by one-fifth due to macro market factors exacerbating the current crypto downturn — though the company’s recent $100 million fine may also have added to payroll pressures.
“As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario,” Coinbase CEO Brian Armstrong wrote in a blog post announcing the job cuts.
In its most recent 8-K filing on Tuesday, the crypto company indicated it expects adjusted EBITDA losses for the full fiscal year to be around or under nearly half a billion dollars.
In February, Coinbase had planned to add 2,000 more employees. Instead, the Tuesday staff cuts mark the third time Coinbase has reduced its headcount since June. Adding to its troubles, the crypto company is presently in the middle of a class action lawsuit alleging it “misled investors regarding material risks attendant to Coinbase’s operations.”
Coinbase isn’t the only crypto exchange facing struggles — far from it — but the fact that Coinbase is one of the few publicly traded and regulated platforms gives more transparency over its operational updates, be they good or bad.
Industry peer and rival exchange Binance, which has faced its own slew of controversies closing out 2022 and even entering 2023, is reportedly “bleeding assets,” with PYMNTS relaying that the titanic crypto exchange has seen $12 billion in customer withdrawals over just the past two months.
Even bitcoin miners are rebranding themselves to show observers and investors they are diversifying their businesses, with the miner Riot Blockchain going so far as to drop blockchain from its new name, Riot Platforms.
“Nothing about the underlying infrastructure or architecture of Bitcoin or other blockchains has really changed,” Stephen Pair, CEO of blockchain payment processor BitPay told PYMNTs in a recent interview that touched on the current state of the industry.
But if bitcoin is de-pegged from crypto more broadly, what exactly is supporting its value?
While some might argue that Bitcoin’s current $17,000 price level reflects the asset’s still unrealized potential to revolutionize the payments landscape, other marketwatchers are more hard-pressed to find answers, taking a ‘time will tell’ stance instead.