Coinbase lays off 18% of its employees and warns of a “winter” for cryptocurrencies

The fall of bitcoin affects the network Celsius 1:00

New York (CNN Business) --

Cryptocurrency exchange Coinbase has laid off 18% of its employees as the cryptocurrency market continues to unravel.

CEO Brian Armstrong said in an open letter Tuesday that the "difficult decision" to lay off some 1,000 employees was made to ensure "that we stay healthy during this economic downturn."

The exchange has more than 4,900 employees, according to its website.

Armstrong warned of an impending economic downturn that could prolong the latest bear market in cryptocurrencies.

"It appears that we are entering a recession after an economic boom of more than 10 years," Armstrong wrote.

"A recession could lead to another crypto winter, and it could last for an extended period."

Although Armstrong said it's hard to predict future economic conditions, the company plans "for the worst so we can operate the business through any environment."

• Bitcoin sinks below $24,000 as crypto crash claims another victim

Coinbase's market value has imploded as investors continue to sell off cryptocurrencies, bailing out risky assets in anticipation of sharp interest rate hikes to tackle inflation.

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Bitcoin hit an all-time high of $69,000 in November 2021. Since then, the world's most valuable cryptocurrency has lost two-thirds of its value, falling below $23,000 on Tuesday.

It has lost about 25% of its value since Friday.

Coinbase shares, meanwhile, have fallen about 80% this year and 85% since its initial public offering in April 2021. The company, once worth nearly $100 billion, is now worth less than $12 billion. .

In his blog post, Armstrong admitted that Coinbase “grew too fast” as cryptocurrency trading skyrocketed in early 2021.

"While we did everything we could to make this fair, in this case it is now clear to me that we hired too much," he said.

Other market players are also in difficulty.

Celsius Network, a major cryptocurrency lender, said on Monday that it was suspending all withdrawals and transactions due to "extreme market conditions."

-- Anna Cooban of CNN Business contributed to this report.

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