Whilst the blockchain and cryptocurrency industries both made strides in 2017 and 2018, it is no secret that the bear market that took the scene for most of last year has severely affected investors and companies alike, especially those who bought in when Bitcoin and altcoins were at their respective peaks.
First Digital Assets (FDA,) an Israeli blockchain application platform registered under Gibraltar jurisdiction, is the latest company that has conceded defeat when it comes to sustainability of operations and personnel, although the firm has plans to keep functioning and will endure a significant, but necessary restructuring period.
The firm announced via the Globes news hub on Monday, March 4th, that it would dismiss the majority of its workers because of the financial issues created, in part, by the hostile environment that has plagued the cryptocurrency market ever since it began to slide last year.
A Turn for the Worst
Bitcoin, for example, was trading at more than $19,000 at the start of 2018. However, the collapse started that same month, and every time the coin seemed to find a stability period, it started a new downturn: in mid November, after weeks of hovering around $6,000 – $6,500, it began a new tumble that saw it drop as low as $3,200.
As of the moment of this writing, a full recovery has not even started yet. The world’s premier cryptocurrency was trading at $3,759.53, which represents a 1.27 fall in the last 24 hours. Total market capitalization has fallen considerably since those early 2018 days and is now at $66,060,377,789 USD, with an $8,861,065,044 USD trading volume in the last day.
First Digital Assets manages several spin-off firms related to the blockchain, but due to the crude market conditions and the consequent decision to cut personnel, it will merge all but one into their parent company. The research department, One Alpha, will be shut down entirely.
Among the spin-offs that will be merged into the parent company will be K1, Stamina, Titan, and Knox. Some of the firm’s investors are Ronald Cohen (Apax Partners’ founder,) the Mangrove fund, German-Israeli fund TargetGlobal, the Scale-Up Crypto Capital fund, and iAngels. FDA has raised $21 million to date.
Focus on Liquidity
“The cryptocurrencies market experienced an earthquake last year, which forces us to be brave and consider First Digital Assets’ various activities. We are… focusing on our liquidity activity, which continues to be fruitful, while at the same time channeling our development efforts to creating new solutions in blockchain, which we believe is the technology of the future,” company representatives told Globes.
It was not indicated how many employeed FDA would dismiss because of the controversial decision. The company is not the first one to implement drastic moves to try to save money because of the bear market, and it probably will not be the last.
Several businesses venturing in the crypto space have been forced to close, cut down the number of employees, or reorganize their paths, even restructuring specific areas to shift focus to other objectives that would ensure better opportunities. Bitmain is one of the most resounding names, laying off 23 employees after closing operations in Israel. Huobi and ConsenSys had to take similar decisions, as well.
By Andres Chavez