It looks like the cryptocurrency market will end this week on a sour note as the values of most major tokens were declining on Friday. The latest jobs report in the U.S. was better than expected, but that didn’t do much to help crypto or the stock market. The broad market S&P 500 was down 1.9% in Friday morning trading, and the tech-heavy Nasdaq Composite was off 2.8%.
As of 11 a.m. ET, Coinbase Global (COIN -9.66%) was off by 10.4% after having been down by as much as 11.1% in early trading. Solana (SOL 4.48%) was down 7.4% to a price below $40, while Ethereum (ETH 1.05%) had dropped 3.1% to under $1,800.
The biggest news in the crypto world Friday was that Coinbase said it was pausing hiring for “both new and backfill roles” in light of the current environment. That followed an announcement earlier this week from crypto exchange Gemini that it was laying off 10% of its workforce.
The New York state legislature also just passed a bill that would put a two-year moratorium on proof-of-work crypto mining operations in the state that use fossil fuel power sources. That, of course, is a category that includes Bitcoin mining. The bill still needs Gov. Kathy Hochul’s signature to become law.
On top of this, several media outlets are reporting that major names in the crypto space now predict that thousands of the cryptocurrencies that have launched in the last few years will collapse in the next few, leading to another “crypto winter.”
The overall theme here is that the cryptocurrency market is going through a shakeout that will likely weed out the weakest tokens, blockchains, and cryptocurrency companies. Something similar happened in the dot-com crash in the early 2000s. For companies facing such conditions, the first priority will be survival.
We are seeing a significant shift in attitude among executives and traders. As a result, investors are growing more conservative, and focusing on companies and projects that are building real long-term value.
I think the value in cryptocurrencies will ultimately come from companies like Coinbase and blockchains like Ethereum and Solana. But that doesn’t mean that all three won’t go through some major declines and difficulties as the industry shakes out and long-term value and utility are built.
What’s tough for investors is that we can’t see a bottom, nor any sign of a pending turnaround. Fears are increasing that the U.S. economy is already in a recession that may get worse, and high inflation is a huge cause of uncertainty.
With that said, the market usually hits bottom when there’s the most bad news and uncertainty. In 2009, the stock market hit bottom before unemployment peaked, then climbed even while the economy was in its roughest shape. If that pattern is about to repeat, this moment would be a buying opportunity for investors, not a time to run for the hills. But there’s still a great deal of uncertainty, especially in crypto, and companies are starting to prepare for the worst.
This news is republished from another source.