It has become abundantly apparent that the Bitcoin price crash-induced crypto winter hasn’t managed to seduce bears. The crash in the broader cryptocurrency market, which sent investors running en-masse, has resulted in a number of layoffs at this (not so) budding sector’s most preeminent firms. Bitmain, Huobi, and even ShapeShift are among the notable startups that have purged employees to bolster their bottom line.
But the bloodshed is far from over. An Israeli blockchain company is the most recent domino to have fallen in the Rube Goldberg machine-esque cryptocurrency space.
Blockchain Startup Purges Most Employees
Per a report from local outlet Globes, First Digital Assets Group (FDA), a blockchain application group, will be dropping most employees from its payroll. Citing sources familiar with FDA’s operations, Globes wrote that the company will be “rethinking its policy,” leading to a company-wide overhaul.
As a part of this refresh, FDA will purportedly be totally purging its industry research division, One Alpha. The Israeli upstart will also be putting its K1, Stamina, Titan, and Knox ventures on the backburner, merging a majority of these subsidiaries’ facets with the parent group.
The insiders didn’t divulge the specifics, nor did First Digital Assets spokespeople, who corroborated the sources’ material. However, it is known that the conglomerate, launched in 2017 as the crypto market rallied dramatically, once had 65 employees in its Givatayim offices. FDA’s representatives told Globes that as Bitcoin underwent an “earthquake,” the C-suite at the company decided to focus on its “liquidity activity (cash flow),” while it aims to redirect its efforts at bolstering offerings built on blockchain platforms, “the technology of the future.”
Funnily enough, the company added that it still has a “large sum” in its war chest, which has received $21 million from a handful of venture investors over the company’s two-year history.
FDA’s decision to undergo a drastic restructuring comes after mining giant Bitmain shuttered its division in Israel. As reported by Blockonomi previously, the Beijing-headquartered company closed its blockchain development center, whose primary objective was to manage mining pool Connect BTC. The branch was also working on Bitmain’s foray into artificial intelligence, Sophon.
Just weeks later, the company closed its Amsterdam offices and Bitcoin mining farm in Rockdale, Texas.
Does Bitcoin Need More Pain To Rally?
Layoffs are harrowing, especially in a space as nascent as blockchain technologies, but one analyst claims that such shortcomings are necessary. How about that?
Anti-establishment figure Travis Kling took to Twitter in late-January, remarking that the crypto ecosystem will take another bone-breaking, heart-stopping, and blood-inducing blow before a rally.
In a foreboding tweet, Kling, the incumbent chief investment officer at Ikigai, noted that if Bitcoin is to see a resurgence, the recent array of industry shortcomings, including layoffs, exchange collapses, stringent regulation, and cries that “crypto is dead,” will be just the tip of the proverbial iceberg. This comment is, of course, in reference to the popular sentiment that true capitulation marks a long-term bottom in any market cycle.
The former portfolio manager at Steven Cohen’s personal hedge fund, Point72, isn’t the only industry insider to claim that depressed market conditions are needed. Bully Esq, a prominent analyst, noted that the “bursting” of the Dotcom Bubble was a “necessary correction,” as the downturn spawned Amazon, Google, and a number of other Internet mainstays.
Drawing lines between the nascent Dotcom space and cryptocurrencies, Bully added that while a correction is hammering this space, now’s an optimal time for industry participants to accumulate, build, learn, network, and be ready for when this market begins to gain mainstream traction for the second time.