Key Insights:
- The bear market and the after-effects of the FTX crash continue to affect firms in the crypto industry, particularly exchanges
- The rumors about a mass layoff from Huobi Global have been confirmed, and Huobi Token took a nosedive.
- Huobi Token found support at $4 and may be a good swing point for further price action
Huobi is in crisis. Things have not looked so promising for several aspects of the digital asset industry, during the ongoing bear market and ever since the multi-billion dollar hole created by the FTXÂ collapse.
In the latter part of 2022, crypto exchanges like Genesis which were major clients of FTX halted withdrawals, went bankrupt, laid off about 20% of its workforce, and replaced its CEO (while currently owing about $900 million to its clients according to reports).
2023 is a week in, and there are reports of a -43% stock crash and a bank run on Silvergate Capital, that has forced the bank to sell its assets at losses to cover its ~$8.1 billion withdrawal backlog.
In other words, if the events of the last few months are anything to go by, mass layoffs are one of the telltale signs of an impending bank run, and investors in the digital asset industry continue to be wary of any potential reoccurrences of the FTX saga.
In recent news, however, Huobi Global, the Chinese crypto exchange has now come under fire after rumors that it is planning mass layoffs surfaced.
These rumors have been confirmed by a representative from the crypto exchange. In addition, the Huobi Global native cryptocurrency has taken a nosedive.
Huobi Crisis and Layoff Rumors
In the fourth quarter of 2022, there were reports about a Huobi-linked entity stating that it had $18.1 million stuck in FTX when news of the crash was fresh.
Out of this $18.1 million worth of funds, $13.2 million was from customer deposits and $4.9 million belonged to other Huobi subsidiaries. These reports at the time caused some panic among its investors but were soon dismissed as the FTX ripple effect cooled off.
In 2022, there were also rumors that the crypto exchange was planning mass layoffs according to a report from the South China Morning post this week, on 2 January.
The Chinese journalist Colin Wu corroborating this story, also reported earlier in December 2022 that Huobi would halt its year-end bonuses and would cut its workforce by 40% from more than 1,100 employees to less than 800.
Justin Sun’s Huobi exchange will cancel all year-end bonuses, and will prepare to lay off the team of 1,200 people to 600-800 people, and cut the salaries of senior employees, according to several insiders. Exclusive
— Wu Blockchain (@WuBlockchain) December 30, 2022
These reports by Colin Wu, although unbacked by any verified sources were also echoed by other sites and news outlets.
However, in response to these reports, Justin Sun, originally known as the founder of the Tron ecosystem mentioned that the reports were “untrue” and that Huobi has been growing in a vital “development era.”
Barely a week after Sun’s denial of the layoff reports, a spokesperson from Huobi has now confirmed plans that the crypto exchange would be laying off 20% of its employees as part of its restructuring plans after the Justin Sun takeover.
Details of the report mentioned that as a result of the ongoing bear market, a very lean team will be maintained going forward and that the firm has adjusted its business department.
Rise and Fall of Huobi Token
According to data from CoinMarketCap, Huobi Token has had a long-term bearish perspective. The cryptocurrency has been on a decline since October 2022. The Huobi Token (HT) saw an over 50% decline in the last quarter of 2022.
From a monthly perspective, however, the cryptocurrency’s price action has been incredibly volatile.
After hitting a $3.84 low in early July 2022, the cryptocurrency soared 146.84% to the upside in October after consolidating for three months in between.
The cryptocurrency held its ground around the $9 zone until early November when the FTX saga hit. This FTX collapse sent the cryptocurrency plummeting from its high around the $9 zone, to as low as $3.77 in a 60% crash.
Huobi token, however, didn’t stay down for long and managed to rise to $7.3 before falling again to$4.81 where it now sits.
The cryptocurrency’s price action on the charts while unclear, now resembles a descending triangle formation, with the $4 mark as its base.
According to the chart, Huobi Token appears to be headed for a retest of the $4 mark and currently sits at $4.80. The $4 mark or slightly below may present an opportunity for the swing traders to enter long positions, with the likely bullish targets being the top of the triangle around $5.79.
Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.
