Cryptocurrency companies are cutting their Christmas gift budgets as the industry headwinds continue to dampen the performance of major cryptocurrencies.
The price of bitcoin, the world’s most valuable cryptocurrency, traded at $16, 838 on 25 December according to data from Coinmarketcap, a level it has remained since 12 November 2022.
The last time bitcoin breached the $16,000 level was January 8, 2018, according to CoinDesk data. Bitcoin closed December 2021 at $47,192.17.
For crypto exchanges like Binance, Quidax, Bundle, and Luno with presence in the Nigerian market it means profit losses as more users continue to withdraw their assets for safety keeping.
Osaretin Victor Asemota, a Growth Partner at AnD Ventures, Africa Partner for Alta Global Ventures, said he lost all his assets to the FTX crash. The collapse of FTX set off the largest crypto-related bankruptcy ever and affected the confidence of investors in the market even more than the global economic downturn which led to a massive sell-off in global exchanges.
“I switched off completely. Crypto isn’t worth my time anymore. I have left speculation,” Asemota said.
Damodar, a robotics engineer, said the fundamental fault of crypto was valuation.
“It’s easily abstracted to a warehouse, an empty one. The goods are the entire reason for the warehouse, so the goods have greater value. The warehouse was crypto, but they were valued as goods, money,” he said. “If it were valued fundamentally as what it was, a ‘database’ solution, and compared to existing solutions, you’d realise it sits somewhere in the middle of already existing ideas. But there are things out there that will change our world today, and they are incredibly vast.”
In a bid to avoid going under, a few crypto exchanges embraced mass layoffs. Quidax laid off 20 percent of its little over 100-people staff in November. Earlier in the year, the company also slashed employee salaries by 30 percent, and 50 percent for team leads, with an understanding that the slash would last only 3 months, according to a TechCabal report.
Nestcoin, another Lagos-based crypto exchange, laid off staff because $4 million of its operating capital had been deposited with FTX.
Lazerpay, a crypto payments processing company that launched in February, was also caught in the middle of the FTX collapse which led to laying off staff.
Binance and Luno are silent about any plans to lay off staff; neither are they planning to make any recruitment in the coming months. Users who usually get Christmas hampers every year from both companies said nothing came in the mail regarding gifts.
As exchanges counted their losses, many founders and billionaires in the crypto industry were also left in debris of the market route.
Forbes estimates that 17 of crypto’s wealthiest investors and founders have collectively lost an estimated $116 billion in personal wealth since March. Fifteen of them have lost more than half their fortune over the past nine months. Ten have lost their billionaire status altogether.
But some operators are still hopeful the market would turn the tide in the coming year. Part of that confidence is coming from a move by Nigerian lawmakers to enact a law that technically legalises crypto trading in the country.
The Investments and Securities Act, 2007 (Amendment) Bill, when passed and signed into law, will allow the Securities and Exchange Commission to recognise cryptocurrency and other digital funds as capital for investment. The proposed law will also define the regulatory roles of the Central Bank of Nigeria (CBN) and SEC regarding digital currency.
Crypto trading remains restricted in Nigeria following an order by the CBN restricting financial services providers from transacting with crypto and crypto-related businesses and individuals. The order also bans these businesses from holding an account with the financial services providers.
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