Big Layoffs at Twitter and Meta. How is the Big Tech Meltdown Impacting Crypto?

After major layoffs, where does big tech go from here? Is now the time to embrace Web3?

The drastic decisions made by Meta and Twitter are at the center of some recent controversial topics. Big tech is laying off many people, and the FED is raising interest rates. The CEO decisions, such as those from Mark Zuckerberg for Meta and Elon Musk for Twitter, worsened the situation, while big tech investors declared they were very dissatisfied.

What exactly happened?

The Twitter and the Meta Layoffs

Facebook and Twitter, two of the biggest tech companies and advertising platforms, have recently announced layoffs or job cuts. Big Tech is less inclined to invest in their organizations’ growth than in the past years because of the high-risk environment driven by rising inflation, slow consumer spending, and other factors.

Meta CEO Mark Zuckerberg announced significant layoffs in late September by firing as much as 10% of the employees. Zuckerberg had earlier revealed the move to hundreds of officials in a meeting on Tuesday, adding that he was guilty of the company’s mistakes in overhiring.

This comes after Elon Musk decided to cut almost 50% of the personnel on Twitter.

In addition to external, economic, and global causes, these decisions also came as a “solution” to poorly managed internal problems, such as bad execution of the core strategy, hiring too many people under the “empire-building idea,” or little to no focus on code.

The layoff decisions affect employees and the economy in general, as corporations have been a key driver of global financial growth for the past decade.

The trend is picked up by other tech giants

Not just Meta and Twitter are facing a different economic reality, but also other tech companies.

Snap, Amazon, and Microsoft recently reported earnings that fell short of expectations.

Every company is different, and each needs to concentrate on establishing the best solutions for itself. But it seems that the general solution corporations offer in response to the multitude of problems is to announce they will either temporarily pause hiring or completely cut jobs.

Snap (or Snapchat, the multimedia messaging app) announced its layoffs after Snap’s stock price fell over 80% in the last year.

Amazon has suspended corporate hiring in its retail business for the rest of the year. Although, it has not yet announced any layoffs.

Microsoft announced that it had cut off some of its workforce, affecting 1,000 individuals—and this seems just the beginning.

How is the crypto market impacted?

The U.S. central bank, responsible for conducting monetary policy and controlling the money supply, has also made drastic decisions. The Fed announced on Wednesday that it was raising its benchmark rate by three-quarters of a percent for the fourth time in a row.

The rising interest rates are primarily a result of the high, persistent inflation.

This, plus the tech fallout, is causing a downtrend that is affecting all financial markets. And the crypto area has felt this influence in many ways.

The crypto market has declined since interest rates started rising, and the rising unemployment doesn’t seem to help at all. By following the Bitcoin to USD price, investors note that the volatility is influenced by both micro and macroeconomic factors.

First, crypto volatility is very high at these times. This volatility involves massive price swings. For investment and portfolio diversification, it is crucial to analyze Bitcoin volatility and the elements that contribute to it. Also, it is essential to be in touch with the news about the market’s current situation and what can influence it.

But on top of what was already going on, the collapse of FTX has increased the volatility in the cryptocurrency market. It has also created increasing pressure for regulatory scrutiny over the industry for officials in Washington, DC.

In short: FTX recently became the third significant cryptocurrency business to go bankrupt in 2022. It joined Terra Luna and Three Arrows Capital. Each of these three examples used cryptocurrencies as securities.

FTX had a liquidity issue. FTX defaulted and declared bankruptcy because of the value collapse in collateral. Binance also reversed its decision to buy out the struggling competitor in a vanquished attempt to save the market collapse.

Another problem was that many users wondered whether crypto could recover by the end of 2022. Things weren’t looking any better a few months ago, either. For example, Coinbase also had a job cut in June 2022.

Coinbase announced it cut 18% of full-time jobs, translating to a reduction of around 1,100 people. Coinbase, which made its stock market debut this year, has lost over 80% of its value, crashing alongside cryptocurrencies.

Out with the old and in with the new?

The world of Web2 internet technology giants and burgeoning Web3 companies face a crucial crossroads. More and more Web2 companies, like Meta and Twitter, look to be pivoting with experimental services in blockchain and Web3 technology.

Examples include Meta, which has integrated the usage of Polygon NFTs for Instagram and other platforms. While Binance put in $500 million to help fund Elon Musk’s Twitter acquisition. Binance has publicly stated it plans to work with Musk on blockchain integration into the popular social media platform.

Even Google Cloud also joined the mix by becoming a validator of the Solana network, amongst other involvements by Alphabet.

The downsizing of many companies in tech could bring a silver lining to the world of Web3 that helps bring innovations. The near-term prospects of many companies still do appear rocky and tumultuous—as does the entire macroeconomic perspective. But the employment shake-ups could help usher in a new paradigm amongst these countries in the long term.

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