Cryptocurrency companies are slashing their Christmas gift budgets as industry headwinds continue to affect the performance of major cryptocurrencies.
Cryptocurrency companies are slashing their Christmas gift budgets as industry headwinds continue to affect the performance of major cryptocurrencies.
The price of bitcoin, the world’s most valuable cryptocurrency, traded at $16,838 on December 25 according to Coinmarketcap data, a level it has held since November 12, 2022.
The last time Bitcoin broke above the $16,000 level was on January 8, 2018, according to data from CoinDesk. Bitcoin closed December 2021 at $47,192.17.
For crypto exchanges like Binance, Quidax, Bundle, and Luno with a presence in the Nigerian market, it means lost profits as more users continue to withdraw their assets to keep them safe.
Osaretin Victor Asemota, a growth partner at AnD Ventures, the African partner of Alta Global Ventures, said he lost all his assets in the FTX accident. The FTX collapse triggered the largest cryptocurrency-related bankruptcy in history and hit investor confidence in the market even more than the global economic downturn that led to a sell-off on global exchanges.
“I completely shut down. Crypto is no longer worth my time. I have stopped speculation,” Asemota said.
Damodar, a robotics engineer, said that the fundamental flaw in cryptocurrencies was valuation.
“It is easily abstracted to a warehouse, an empty one. The goods are the total ratio of the warehouse, so the goods have a higher value. The warehouse was crypto, but they were valued as goods, money,” he said. “If you were to look at it fundamentally for what it is, a ‘database’ solution, and compare it to existing solutions, you’d realize it’s somewhere in the middle of existing ideas. But there are things out there that will change our world today, and they are incredibly vast.”
In an attempt to avoid going under, some cryptocurrency exchanges have adopted mass layoffs. Quidax laid off 20 percent of its staff of just over 100 people in November. Earlier in the year, the company also cut employee salaries by 30 percent and 50 percent for team leaders, with the understanding that the cut would last for only 3 months, according to a TechCabal report.
Nestcoin, another Lagos-based cryptocurrency exchange, laid off staff because $4 million of its operating capital had been deposited with FTX.
Lazerpay, a crypto payment processing company that launched in February, was also caught in the middle of the FTX collapse that led to layoffs.
Binance and Luno are silent on any plans to lay off staff; nor do they plan to make any contracts in the coming months. Users who usually receive Christmas baskets every year from both companies said nothing arrived in the mail regarding the gifts.
As exchanges counted their losses, many founders and billionaires in the crypto industry were also left in the rubble of the market path.
Forbes estimates that 17 of crypto’s richest investors and founders have collectively lost an estimated $116 billion in personal wealth since March. Fifteen of them have lost more than half of their fortune in the last nine months. Ten have completely lost their billionaire status.
But some traders are still hopeful that the market will turn around next year. Part of that confidence stems from a move by Nigerian lawmakers to enact a law that would technically legalize cryptocurrency trading in the country.
The Securities and Investments (Amendment) Bill, 2007, when passed and enacted, will allow the Securities and Exchange Commission to recognize cryptocurrencies and other digital funds as capital for investment. The proposed law will also define the regulatory roles of the Central Bank of Nigeria (CBN) and the SEC with respect to digital currency.
Cryptocurrency trading remains restricted in Nigeria following a CBN order restricting financial service providers from transacting with crypto and cryptocurrency-related companies and individuals. The order also prohibits these companies from maintaining an account with financial service providers.
