The Crypto Winter is Very Much Still Here

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  • While crypto prices may be on the rise, the wider ecosystem is still gripped in the middle of a deep freeze
  • Job cuts, reduced funding and diminishing retail interest show the real truth
  • There is concern that the wider economic situation could delay the crypto spring even further

The crypto market may be up $250 billion since the depths of the bear market last year, but the crypto winter is still very much here. Almost a year after FTX imploded and wiped away that $250 billion in the first place it might be tempting to think that, with Bitcoin’s price getting on for double its bear market bottom, that the space is rejuvenated. Several incidents this week have highlighted that this is far from the case, however.

Chainalysis and Ledger Reduce Staff Levels

Two crypto stalwarts, Ledger and Chainalysis, both cut their staffing levels this week, Ledger by 12% and Chainalysis by 15%. Ledger CEO Pascal Gauthier blamed “macroeconomic headwinds” and “current market conditions and business realities” for the need to cut staff, with Chainalysis citing “ongoing strategic shifts to balance our growth aspirations” for its need to cut staff for the second time this year.

Last year saw the typical rash of crypto redundancies and the fact that they have been renewed in 2023 is a concern.

Project Funding at Three-year Low

Q3 of 2023 saw funding for crypto projects fall to its lowest level in three years, according to blockchain intelligence firm Messari. The amount raised by crypto firms between July and September totaled just under $2.1 billion across 297 deals, the lowest on both counts since Q4 2020.

This is in contrast to the $17.5 billion that was handed out across over 900 deals in Q1 2022, with returns diminishing throughout the year as conditions in the crypto industry worsened.

Developer Numbers at Three-year Low

It comes as perhaps no surprise to know that with reduced funding comes reduced work, and this is reflected in the fact that the number of active, open-source developers in crypto has reached its lowest point since 2020, according to data from Electric Capital’s State of Crypto Index.

The index shows that crypto coders have nearly halved from their peak last year, dropping from 36,500 active devs in January 2022 to just 19,630 active devs in September 2023. It goes without saying that a flourishing ecosystem will attract developers to it, and the fact that the industry has been experiencing a near two-year slump says everything.

Google Searches Continue Downtrend

Google searches for ‘crypto’ in the United States have been on a downtrend since spiking to 100 in Google’s popularity metric in May 2021. Interest is now down to late 2020 levels and, worryingly, hasn’t even begun flattening out.

This lack of interest in crypto is typical of an ongoing bear market, and the worrying fact is that following the 2016-17 bull market it took ‘crypto’ searches two years to show any real omentum from the point that this chart flattened out.