Cryptocurrency: After the crash, tech companies are dispensing en masse

After a huge improvement during the health crisis, the cryptocurrency sector has been crashing again for a few weeks. Bitcoin is down about 70% from its all-time high last November. On Thursday, it was even approaching the symbolic low of $20,000, its lowest level in more than a year and a half. Ether, Binance, and Solana also dropped significantly. In addition to the exception of Binance, the largest cryptocurrency exchange by trading volume according to the specialized Coinmarketcap, which announced the employment of 2,000 people, the recent price drop has forced most of the major crypto companies to break up. their employees.

On Tuesday, Coinbase announced that it intends to cut 18% of its workforce, or roughly 1,100 jobs. Other crypto companies such as Gemini, BlockFi or Crypto.com are also planning to lay off 5-20% of their employees. Notable startups, like Terraform Labs, have literally exploded inland. On Sunday, demo crypto bank Celsius abruptly halted withdrawals. “This is where we are, in a phase of deflation that settles into a period of stagnation – what our industry calls crypto winter,” Tyler and Cameron Winklevoss, CEO and Chairman of Gemini, respectively, wrote in early June. . The twins point to the war in Ukraine and high inflation, “all exacerbated by the current macroeconomic and geopolitical turmoil.”

“There is an increasingly strong correlation between cryptocurrencies and traditional markets. But today, the latter, due to inflation and major price hikes, such as Federal Reserve rates, or even the war in Ukraine, fundamentally lacks visibility,” he recently explained to Express Xavier Vino, partner at Interactiv Trading, was not surprised by the market changes. “In these difficult times, investors are therefore tempted to cash in on their riskier assets. What are cryptocurrencies. As this market is still very young, it is subject to more powerful jolts in case of movement.”

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Stable Coins, Not Stable Anymore

The fall of the Terra ecosystem tokens has concerned professionals in this sector in particular. From about $65, the price of Terra-Luna, which had a capitalization of about $40 billion at the beginning of May, lost almost all of its value in a few days, sending TerraUSD (UST), its stablecoin (stablecoin), the cryptocurrency that Its value is not supposed to fluctuate against a reference currency such as the dollar. However, stablecoins play a vital role in the stability of the crypto market by providing a safe place for traders to place their money among bets on the most volatile cryptocurrencies.

A few days after TerraUSD fell, it was the turn of Tether, the world’s largest stablecoin, to fail to maintain its peg to the US dollar by dropping to 95.11 cents on European exchanges. If the price then recovers, this rare slide has contributed to the decline of bitcoin. Thus these failures have highlighted the fragility of a system based on speculation, with sometimes vague features. In 2019, the US Federal Reserve already criticized in a report “the lack of transparency regarding risks and liquidity of assets that ensure currency stability.”

Asked financial timesTether’s chief technology officer, Paolo Arduino, immediately vowed to defend the digital currency’s dollar peg, stating that the company had bought “a ton” of US public debt that it was willing to sell in that aim. Le quotidien britannique souligne toutefois qu’il “a refusé de donner des détails sur sa réserve de 40 milliards de dollars d’obligations d’État américaines”, censée le prémunir d’une nouvelle chute la secs ne voulé révé” company. “Our counterparties are not public. We are not a public company, so we keep this information to ourselves, but we work with many large institutions in the traditional financial space,” defended a Tether representative.

Intensify expert criticism

It remains to be seen whether these companies will be able to restore investor confidence. Bitcoin had already fallen into oblivion in 2018 (it lost nearly 80% in price, from $20,000 to just under $4,000), before rallying again during the health crisis. In any case, this new fall has given food for thought to the many researchers and IT professionals who make no secret of their aversion to this blockchain-based technology, notes The Washington Post.

In a recent letter sent to the US Senate, 1,500 computer scientists, computer engineers and technicians in the sector were alerted to “disasters and externalities associated with blockchain technologies and investments in crypto-assets” arguing that they are “the inevitable outcomes of a technology that is not intended to be used and will remain forever.” unsuitable as a basis for large-scale economic activity.”

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“Any computer scientist should be able to see that cryptocurrencies are completely broken payment systems, and that “blockchain technology” is a technological fraud” was also launched in early May, Jorge Stolfi, a professor of computer science at Campinas State University in Brazil, tweeted. spread widely. Many experts have followed suit, pointing to the technology’s catastrophic environmental impact or the fact that it has made it possible to create a new form of unregulated finance. arrested on twitterGuido van Rossum, founder of the programming language Python (one of the most used programming languages ​​in the world) didn’t utter the words, thinking we should just “let Web3 [nouvelle version d’internet basée sur la blockchain et la cryptomonnaie, NDLR] He dies in a ball of fire.”


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Dominique René, here on December 6, 2015, is University Professor at Science Po and General Director of the Foundation for Political Innovation.Written by Dominique René, University Professor at Sciences Po and General Director of the Foundation for Political Innovation

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