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Cryptocurrencies have had a harsh year in 2018. A long-lasting downturn brought many crypto-based companies to their knees as cryptocurrencies struggled to regain their lost value. In fact, cryptocurrencies were losing value even in December of 2018. This shows you that they have not even found their feet yet let alone cover lost ground. The bear market cycle has caused some of the most heavily invested companies to cut their losses and turn to other markets. The latest company to fall victim to this ‘crypto winter’ is the cryptocurrency exchange ShapeShift.
In a blog post, ShapeShift CEO Erik Voorhees announced that he has had to cut their staff by a third and let go 37 employees. ShapeShift placed the blame of their troubles on the continued cryptocurrency bear market as well as the company’s own business model. Their business model has been such that it exposes them to the volatility of the cryptocurrency market. While this approach allows them to grow exponentially when the market is on a bull run, it hurts them just as badly when the market is going through a downturn.
“Much of our balance sheet is comprised of them [crypto assets]. We accept the volatility, we accept the risk,” Erik Voorhees states in the blog post. “Our proclivity to attach our own fate to that of the crypto market is not altered by the recent pain.” Despite having had a rough time because of their close attachment to the cryptocurrency’s volatile market, the blog post states the company’s intent not to make any changes in their business model.
In the blog post, the ShapeShift CEO holds many factors responsible for this decision to lay off such a large part of their staff. Mainly blaming the structural, legal, customer and financial issues. In a summary, the company grew too fast to have really managed their growth and the current bear market made 2018 a challenging year.
ShapeShift is not the only company to have had to rethink their priorities when it comes to their commitments to the crypto market. Recently, the crypto mining equipment manufacturer GMO decided to quit their mining equipment business after they reported a loss of $321.6 million in 2018.
The current downturn has been brutal for most of the market. The companies that entered the market hoping for quick profits were simply run over by the consistent drops in prices all year. Discouraged and disappointed investors pulled back their investments, painting an overall gloomy picture for the coming year.
However, the underlying technology of cryptocurrencies, blockchain received a lot of attention in 2018. With some big companies like Samsung, IBM, Amazon and Walmart implementing their own blockchain solutions. This might be the only silver lining for the crypto market.