The ongoing cryptocurrency bear market has impacted several elements of the sector, with exchanges emerging as the latest entities to feel the hit. Indeed, the number of exchanges has dropped as crypto-related businesses struggle to remain afloat amid significant sell-offs.
As of July 6, the number of crypto exchanges globally stood at 500, a drop from highs recorded in previous months. By using a web archive tool, Finbold has determined the sector has lost 25 exchanges in 30 days, considering that on June 6, the figure stood at 525, according to CoinMarketCap data.
The wipe-out of crypto exchanges is partly tied to the drop in value of the general crypto market as several businesses in the space look for exits. Besides the crypto market meltdown, exchanges have been impacted by other macroeconomic conditions, such as rising inflation figures that have made it challenging to sustain businesses.
Crypto businesses readjusting plans
Crypto companies generally responded to the meltdown by re-evaluating their plans for the future, and opting out of the industry appears to be one of the options.
Sell-offs in major digital currencies like Bitcoin has correlated with the broader slump in stock markets, particularly in the technology sector. The crisis was deepened by the Terra (LUNA) ecosystem crash, an aspect that might have eroded trust in the sector.
Notably, smaller exchanges are likely the most impacted, considering some investors have opted to seize trading activities and HODL their assets awaiting the next market rally. Additionally, the escalation of the bear market forced retail investors to exit the market.
Interestingly, the massive price correction has not spared leading exchanges that have been forced to readjust their business to remain operational. For instance, Coinbase, the leading exchange in the U.S., imposed a hiring freeze alongside announcing a layoff to sustain its operations.
Following the exit of the changes, regulators might be alarmed and enact strict laws aiming to protect investors. Notably, most exchanges shutting down sometimes fail to share the status of investor deposits. Such circumstances have consequently eroded trust in the growing crypto sector.
Although the crypto market is relatively new, some market observers believe the closure of exchanges might benefit the sector. They opine that the bear market is an excellent opportunity to eliminate non-serious crypto entities.
Generally, the ongoing market downturn continues to impact the global economy; the focus will be on how the crypto exchanges and companies will handle the bearish pressure and survive the ongoing financial onslaught.