While Bitcoin continues its rally toward another record high and exchange-traded funds (ETFs) experienced renewed inflows, a more subdued reality is emerging across the cryptocurrency sector.
Diminished enthusiasm for once-popular digital assets has pushed some major companies to make significant job cuts.
On Wednesday, leading crypto exchange Kraken announced a substantial reduction in workforce, estimated by a source familiar with the matter to be around 15% of its employees.
Meanwhile, rival exchange Coinbase reported disappointing earnings, falling short of analysts’ expectations.
ConsenSys, a prominent blockchain software developer, has also joined the growing list of digital-asset firms scaling back their workforce.
These layoffs contrast sharply with Bitcoin’s recent performance and the optimism in the industry surrounding a potential return of Donald Trump to the White House, who has shown support for the cryptocurrency.
However, many blockchain networks once heralded as viable alternatives to Bitcoin have struggled, and funding for crypto startups plummeted during the third quarter, according to one analysis.
Toby Lewis, co-founder of OrdinalsBot, remarked on the current market trend: “It has been a Bitcoin-dominant market this cycle.
The wider crypto industry is hopeful this will shift to alternative coins, but it’s taking longer than anticipated.”
An analysis of top-performing cryptocurrencies this year underscores this division. Since the start of the year, Bitcoin has risen by approximately 64%, with Solana matching its impressive gains.
Dogecoin, famously linked to Elon Musk, who is also a strong Trump supporter, has surged nearly 80%.
Conversely, a range of so-called altcoins, including Polkadot, Polygon, and Algorand, have faced severe declines.
Bitcoin has always symbolised the cryptocurrency sector’s dramatic booms and busts. The launch of US Bitcoin-backed ETFs in January significantly bolstered its standing on Wall Street, drawing widespread investment.
BlackRock Inc.’s iShares Bitcoin Trust has emerged as a major beneficiary, now overseeing $31 billion in assets after attracting close to $900 million in inflows on a single day this week.
Despite these successes, the benefits have not reached the broader crypto market. Data from Galaxy indicates that venture capital investments in digital-asset startups fell 20% in the third quarter compared to the previous one, totalling $2.4 billion.
This figure remains a shadow of the deal volumes seen during the market boom of 2021, highlighting the enduring wariness since the market’s subsequent crash.
Other sectors within the crypto world, such as non-fungible tokens (NFTs) and blockchain-based gaming, have not rebounded from the downturn that hit the industry hard two years ago.
The market remains divided, with Bitcoin riding high while broader challenges persist for many in the digital asset space.
