Bitcoin is on the rise, why are there frequent layoffs in the Web3 field?

The US crypto industry had many celebratory moments this week: Bitcoin is just inches away from its all-time high, crypto ETFs have set new milestones on Wall Street, and this week's presidential election seems poised to drive the ecosystem's development, regardless of the outcome. However, you can hardly see that all this is overshadowing the difficult week for top US crypto companies. On Tuesday, Ethereum software giant laid off 20% of its global workforce. A few hours later, the New York-based decentralized crypto trading platform reduced its team size by 35%. The next morning, one of the largest crypto trading platforms in the US, , also laid off 15% of its employees. As the week drew to a close, Coinbase released disappointing Q3 earnings, failing to meet expectations, and overall customer activity declined. What's going on? Experts tell that there may be multiple factors at play - from short-term election and regulatory-related anxieties that could be resolved quickly, to deeper-seated issues about the position of crypto-native companies in an industry increasingly dominated by traditional financial giants. "This is absolutely the most bearish bull market in history," Alex Tapscott, managing director of digital asset management at Ninepoint Partners, told . While optimistic headlines about the crypto boom seem ubiquitous, this claim actually only applies to Bitcoin, Tapscott says, as Bitcoin "is increasingly becoming a standalone asset." Even Bitcoin's strength no longer necessarily means profits for the crypto industry. "Yes, the Bitcoin price has gone up a lot, but where did that money go?" Owen Lau, senior analyst at investment firm Oppenheimer & Co., told . "That money went to traditional finance companies, not crypto-native companies." Lau said that as Wall Street giants like BlackRock trade billions of dollars worth of Bitcoin through their trading platforms, leveraging brand trust and ultra-low fees, crypto trading platforms like Coinbase and have been left out in the cold. He added that companies associated with struggling cryptocurrencies like Ethereum, such as , are in an even worse situation. (Disclosure: is one of Decrypt's 22 investors, but Decrypt is editorially independent.) Concerns related to regulatory uncertainty and the upcoming presidential election may have significantly dampened crypto activity and investment - at least for now. Kristin Smith, executive director of the Blockchain Association, told that while she is optimistic that both the Trump and Harris administrations could bring regulatory clarity and support for the crypto industry, the SEC's current adversarial stance towards the industry has already caused significant business damage, which may not be alleviated until next year. "I think a lot of capital is still on the sidelines and nervous about entering this space until they see more clarity," Smith said. "So I do think the regulatory issues and the political issues are a key factor in all of this." Earlier this week, the Blockchain Association launched an initiative to track how much money leading crypto companies have spent defending themselves in lawsuits brought by the SEC. The organization said this figure has already exceeded $400 million. On Tuesday, when announced a 20% layoff, the company's CEO Joe Lubin said the layoffs were related to the "millions of dollars" had spent defending itself in court. Nevertheless, some experts insist that even if the US government embraces the crypto industry, its predicament will not disappear. Oppenheimer's Lau believes the current landscape of crypto-native companies, especially CEXs, is too crowded, and many of these companies will ultimately either perish or be acquired by traditional finance companies. "I don't know why the market allows 200 trading platforms in the world," he said. "That doesn't make sense to me." Meanwhile, Ninepoint's Tapscott believes that simply removing SEC Chair Gary Gensler is far from enough to unleash a true crypto bull market. "It's not just an election issue," he said. "If you look at past cycles, there's always been some new application or new feature that gets people excited." Tapscott pointed to iconic innovations like decentralized applications (dapps) and as having previously driven crypto markets to unprecedented highs. "What's going to excite people the way those things did in the past?" he said. "I don't think the answer is there yet." While the prospect of politicians and Wall Street embracing crypto is undoubtedly exciting, Tapscott added that this development is not enough to ignite a true industry bull run and cannot replace the enthusiasm generated by genuinely new blockchain use cases. "How do you use this technology to do things that were previously impossible?" he said.