Why did the crypto market crash? Crypto winter explained đ„¶
GM!
This is Cryptonite, your twice-a-week info pack to stay updated in bear markets and bull markets, in the crazy world of crypto.
We hit you with whatâs relevant, upcoming and funny â minus the FUD.
Letâs get started đ„
Say hello to the bear (đ»)market
The crypto market is DOWN and is still going under. To give you a quick Tl;dr (Too long, didnât read)
3 Major things happened:Â
Celsius (a big exchange) halted withdrawals for customers
Lots of traders who borrowed money to buy crypto were margin called
Prices for Bitcoin and Ethereum, fell by 70% this year
Letâs start with prices.Â
Like the share market, crypto has its own share of cycles. But here, the swings for prices are much bigger. More like 70% (as of now).Â
 If youâre new, this is going to be scary. When you see prices going up, or down in the crypto space, your mind might get blown. And the market still might go down a little more.
Weâd say if youâre in for the long haul, HODL on tight, as we think the bear market is going to last for a while.Â
But why did the market crash?Â
Honestly, nobody knows. There could be a number of reasons, but all we can do is link it to a few events:Â
Inflation numbers rose to 8.3% in the US while the Gov increased rates. This led to a stock market sell-off/downturn. Investors stopped buying risky assets which led to the price of crypto falling. As more people sold crypto to de-risk themselves, prices fell further.Â
Thatâs the big picture.Â
On top of this,
Weâve been in a bull market for 10 years where prices have been zooming up
People borrowed more (from the market)Â to buy assets like crypto
The music suddenly stopped, panic set in, and prices started to fall
Large organisations and funds had to sell further to stop getting liquidated. Prices went down!
Adding more pressure onto the market -Â Luna, a cryptocurrency, wiped off $40B off the market last week and Celius, a LARGE crypto exchange, to protect getting liquidated, halted all withdrawals, causing further panic in the market. This further drove down prices, causing more panic sells.
So where are we now?Â
BTC đ»- $20K
ETH đ»- $1.1K
Our take: Personally, we started Cryptonite because we believe crypto is going to last and be world changing. Weâve seen crashes before, and seen people also buy during these times. If youâre going to sell or buy, ok go ahead and do it. But if youâre planning to hold, thereâs no benefit to constantly checking twitter and price charts. Although, timing these markets are unpredictable, and it can take upto 12+ months for prices to recover. Â
The crypto winter layoffs begin đ
Last week, Coinbase was under some heat because they cut off 18% (1100 jobs) of their workforce, and 8% of our India team was affected. They werenât alone, Gemini, BLockFI and Crypto.com all cut their teams too.Â
In short, Coinbase CEO Brian Armstrong said thatÂ
They have to manage costs while increasing efficiencyÂ
The economic conditions have changed quickly
They over hired and needed to cut down
But some companies like Binance doubled down on this market to get talented people into their teams.
Binance said that theyâre hiring more than 2,000 roles from engineers, product, and marketing to business development. Hereâs the tweet from their founder:Â
Binance is also looking to invest in other companies, such as its $200 million investment in Forbes, which would help them get the word out to more people.
Kraken, another top 5 crypto exchange, is hiring around 500 employees.
Our take: As large crypto companies downscale further, we believe this bear market will give rise to leaner teams and better projects.
Crypto Bytes âżÂ
Cricket legend AB DeVillers, has partnered with Blockchain gaming studio Myria to launch a mobile-based NFT cricket game.
Indiaâs short video platform, Chingari has launched a mining program with rewards of upto $12 million each year to their creators. More incentives = more creators + users. Get that bag!Â
Swiss luxury watchmaker TAG Heuer introduces NFT-enabled smartwatch, letting users display static and animated NFT artwork.
Elon Musk gets hit with âridiculousâ $258B Dogecoin lawsuit.
Mark Cuban says - Crypto Firms Sustained by 'Cheap, Easy Money' Will Disappear in Crash.
Tweet of the week
Meme of the week
1DISCLAIMER:Â
None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.