Bitcoin Holds On Amid Crypto Contagion

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As the contagion from the crypto industry continues to spread and add casualties, bitcoin conversely looks stable.

Bitcoin, the first and most widely recognized virtual currency, is often seen as a substitute or proxy for the entire digital asset industry.

While, admittedly, barely a week into 2023, bitcoin trading has so far lacked the swing volatility that characterized the final surge of alternative asset classes in 2022.

At its peak of $3 trillion in 2021, the crypto industry was worth more than the US$2.3 trillion currently in circulation.

The market capitalization of bitcoin alone during this period reached a record high of $1.28 trillion.

The battered alternative digital assets sector has so far limped into 2023 with a total market capitalization that has since fallen below $1 trillion, well under half the amount of USD currently in circulation and less collectively same as the maximum market capitalization of bitcoin alone.

While corrections are usually expected after crypto-like meteoric rises, the sectors’ decline over the past year has been further exacerbated by scandals and bankruptcies that have shaken investor confidence.

Strangely Moderate Bitcoin

As PYMNTS relayed last month (December 27), the outlook for cryptocurrency in 2023 is much more fragile than it was in 2022.

But despite a substantial double-digit loss of 65% for 2022, the world’s largest cryptocurrency enters its 14th year with a 7-day volatility rating pegged at comfortable, semi-steady levels that haven’t been reported by industry watchers in the past 5 years, or since October 2018, as reported on Tuesday January 10 by Reuters, using data from Refinitiv Eikon.

This, as the crypto industry succumbs to a wave of backfire and a growing spillover of industrial disasters.

Genesis Global Trading is reportedly considering filing for bankruptcy and has also laid off 30% of its staff across all departments as part of a major downsizing.

As we continue to face unprecedented challenges in the industry, Genesis has made the difficult decision to reduce our workforce globally. These steps are part of our ongoing efforts to move our business forward, a Genesis spokesperson told PYMNTS in an email when reached for comment.

Similarly, US-based cryptocurrency exchange Coinbase said on Tuesday that it plans to cut its workforce of 4,700 by a fifth due to macroeconomic factors exacerbating the current crypto downturn, though the company’s recent $100 million fine has also added to wage pressures.

As we reviewed our 2023 scenarios, it became clear that we needed to cut expenses to increase our chances of doing well in each scenario, Coinbase CEO Brian Armstrong wrote in a blog post announcing the job cuts. .

In its latest 8-K filing on Tuesday, the crypto company said it expects full-year adjusted EBITDA losses to be around or below nearly half a billion dollars. dollars.

In February, Coinbase planned to add 2,000 more employees. Instead, Tuesday’s staff cuts mark the third time Coinbase has reduced its workforce since June. In addition to its issues, the crypto firm is currently in the midst of a class action lawsuit alleging that it misled investors regarding the material risks of Coinbases operations.

Read more: $100M Fine from Coinbase Highlights Crypto Industry Shortcomings and U.S. Regulatory Strengths

Coinbase is not the only crypto exchange facing difficulties, far from it, but the fact that Coinbase is one of the few exchange-listed and regulated platforms gives more transparency on its operational updates, than they are good or bad.

Peer exchange and industry rival Binance, which faced its own round of controversy closing 2022 and even entering 2023, is said to be bleeding assets, with PYMNTS relaying that the titanic crypto exchange saw $12 billion. customer withdrawals in the past two months alone.

Even bitcoin miners are rebranding to show watchers and investors that they are diversifying their businesses, with miner Riot Blockchain going so far as to drop the blockchain under its new name, Riot Platforms.

Nothing in 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 discussed the state. industry current.

But if bitcoin is more widely detached from the crypto, what exactly is supporting its value?

While some might argue that Bitcoin’s current $17,000 price level reflects the assets’ as yet unrealized potential to revolutionize the payments landscape, other market watchers find it harder to come up with answers, taking a while. will instead indicate the position.

PYMNTS Data: Why Consumers Are Trying Digital Wallets

A PYMNTS study, New Payments Options: Why Consumers Are Trying Digital Wallets, reveals that 52% of US consumers tried a new payment method in 2022, and many chose to try digital wallets for the first time.

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