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Coinbase announced on Tuesday that it was laying off 18 percent of its workforce, following layoffs at other cryptocurrency companies like Gemini, BlockFi, and Crypto.com.

Terraform Labs and other high-profile start-ups have collapsed, erasing years of investment. Cryptic bank Celsius abruptly stopped withdrawals on Sunday.

2021 Crypto Bull Run

After a surge in virtual currency prices over the past two years, the number of crypto start-ups increased. Cryptocurrency investors were flooded with commercials from companies selling digital coins, newfangled lending operations were offering investors astronomical interest rates on their crypto deposits, and exchanges like Coinbase were hiring like crazy.

Almost overnight, a global industry with a value of hundreds of billions of dollars was born. Now it is crashing down.

2022 Crypto Crash

An approximate 65 percent decline has occurred since the fall of the cryptocurrency market, and analysts believe the sell-off will continue. Cryptocurrency companies’ stock prices have plummeted, retail investors are fleeing, and industry executives are predicting a long-term slump that could put more businesses in jeopardy.

In contrast to traditional currencies, which are exchanged through a central bank, cryptocurrencies are digital coins that are exchanged through networks of computers that verify transactions. It has been marketed for years as a protection against inflation brought on by central banks dumping money into the economy.

It’s interesting that Cryptocurrency prices appear to be directly linked to the overall market, in sync with current stock prices plummeting, interest rates skyrocketing, and inflation soaring.

There are now 62 crypto start-ups worth $1 billion or more according to CB Insights, an investment tracking firm. According to research from The Block, venture capitalists invested $25 billion in the industry last year across 1,700 deals. OpenSea, the world’s largest marketplace for nonfungible tokens, has been valued at $13 billion. Wall Street banks like JPMorgan Chase and Fortune 500 companies like PayPal have begun to offer crypto products.

Cryptocurrency prices may fall, but many of these businesses are well-equipped to weather the storm. Cutting back will continue as companies adjust their strategies following years of excessive growth, which is expected. As cryptocurrency prices fall across the board, new entrants to the market may be particularly vulnerable.

Some crypto businesses had shown signs of instability, which should have served as a red flag. Critics claim that many of the most well-known firms offered products backed by risky financial engineering.

There are a number of stablecoins out there, including TerraUSD from Terraform Labs. Do Kwon, the coin’s founder, raised more than $200 million from major investment firms like Lightspeed Venture Partners and Galaxy Digital, despite the warnings of critics that the project was shaky.

Luna, a sister cryptocurrency, was used to determine the price of the coin. In May, TerraUSD’s price fell in lockstep with Luna’s, creating a “death spiral” that shook the market and nearly bankrupted some investors.

It had a similar effect this week when Celsius announced it was freezing withdrawals. To attract customers, Celsius had pushed its bank-like lending service aggressively and promised returns of up to 18 percent for customers who put their crypto holdings with the company.

From my point of view, the Crypto Revolution is well underway and will continue to have a profound impact. Although it hasn’t been a steady or predictable rise or fall.

As always: Do Your Own Research, Educate Yourself, Make Smart Decisions.

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