HomeBusinessBitcoin Price Drops Below $21,000 as Crypto Firms Announce Layoffs

Bitcoin Price Drops Below $21,000 as Crypto Firms Announce Layoffs

Bitcoin price continued to slide on Tuesday as the crypto industry grapples with the fallout from the extended selloff.

Bitcoin traded as low as $20,834 earlier on Tuesday, according to CoinDesk. The original cryptocurrency has not traded below $20,000 since December 2020.

For the day, bitcoin fell 5.4% to $21,991.89, its lowest close since Dec. 16, 2020, according to Dow Jones Market Data. It is down about 68% from its all-time high in November last year at $67,802.

Coinbase Global Inc.,

one of the largest and most valuable crypto exchanges said on Tuesday it was laying off 18% of its staff, a move that comes about a month after the company imposed a hiring freeze. Two other top crypto companies, Crypto.com and BlockFi, also announced layoffs.

Coinbase shares closed down 0.8% at $51.58. The stock has fallen about 80% since the start of the year.

WSJ’s Dion Rabouin explains why Wall Street is now betting big on crypto and what that means for the new asset class and its future. Photo composition: Elizabeth Smelov

Cryptocurrencies have sunk along with other higher-risk assets as the Federal Reserve steadily reverses the aggressive monetary policies it enacted earlier in the coronavirus pandemic. Lately, its efforts to raise interest rates to fight soaring inflation have further undermined investors’ risk appetite.

The market value of the entire crypto sector fell to less than $1 trillion from around $3 trillion in November, according to CoinMarketCap. These falls reflect a significant drop in trading activity and momentum, and until that turns around, industry players like Coinbase will likely remain under pressure, said Kyle Voigt, chief executive of KBW.

Coinbase chief executive Brian Armstrong said the company had grown too quickly, growing from around 1,250 employees at the start of last year to around 5,000 currently.

“We saw the opportunities, but needed to massively expand our squad to be positioned to compete in a wide range of bets,” he wrote in a note to staff. “Although we did our best to make it perfect, in this case it is now clear to me that we have over-hired.”

The price of ether, the home currency of the Ethereum network, fell 4.5% to $1,187.30, its lowest close since January 21, 2021. Over the weekend, the price fell below $1,360, the early 2019 high from the previous cycle.

Other cryptocurrencies were mixed. Cardano fell 1.9%, but Solana rose 1.3% and Stellar rose 0.5%.

Write to Paul Vigna at paul.vigna@wsj.com

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