How Recession-Proof is the Crypto Space?

April 29, 2022

Last year, the global crypto sector grew by a whopping 187.5% (Source: We Forum) and is predicted to reach a total global value of $4.94 billion by 2030.

Every day, individuals and organizations alike are investing and spending cryptocurrencies, taking out loans, and mining coins. Over 18,000 companies are already accepting payments through blockchain technologies, and around 3.9% of the population has become heavily reliant on the proper function of the crypto space (Source: Triple-A).

With 300 million stakeholders reliant on the continued success of crypto in 2022, we now have to pay careful attention to a recent warning issued by advisors: a recession is approaching. Ultimately, whatever threatens cryptocurrencies also threatens worldwide personal and business finances.

What Would A Recession Mean for Employers and Employees in the Crypto Space?

A decline in spending and investing is a huge threat to businesses and employees currently profiting from cryptocurrencies.

Software and security development firms, wallet providers, and bitcoin exchangers alike could each expect to see a fall in their income and wealth, potentially leading to sudden unemployment and job insecurity.

Miners and payment service providers may see a fall in the value of cryptocurrencies, making their ventures less profitable. The high cost associated with mining coins could even result in complete business failure.

That’s not all.

The risks associated with a recession in the crypto space would stop start-ups from entering the market and reduce overall employment opportunities for talent looking for long-term, competitive career paths.

Is the Crypto Space Recession-Proof?

A research director at CoinDesk predicts that 90% of crypto businesses won’t survive a recession, which could lead to disaster and disarray in the market. However, to truly answer this question, we have to divide it into two segments:

What affects one might not affect the other.

DeFi Recession

The multiple threats directly facing the crypto market are bound to decrease consumer trust and reduce economic activity. If left unchecked, users could end up withdrawing their funds and revert to traditional finance for loans and daily spending.

Traditional Finance Recession

Experts believe that bitcoin would thrive during national recessions when banks and private loan companies are struggling and interest rates are high. Desperate organizations, and especially startups, would be more willing to take a risk and adopt blockchain technologies.

“Since bitcoin is decentralized its price could remain stable during a recession. Currently, some people in less stable economies are transferring money to blockchain-based digital currencies. That way, these people can preserve their money's value.” - Daily Cal

How to Mitigate the Risk of Recessions As A Crypto Organization

Whilst no one knows for certain how the market will respond in the case of a global recession, it’s important that employees and companies operating in the crypto space know the signs and are prepared to adapt.

Step 1: Market Research

Data Analysts will become an incredibly useful tool in tracking industry trends and predicting a decrease in user activity. Staying alert to market movements allows crypto companies to prepare for crises.​

Step 2. Build Trust

To reduce the threat of recessions in the crypto space, businesses will need to invest in building trust with their users. This could involve directing funds towards cybersecurity innovation by hiring expert software developers and cloud specialists.

3. Save Money

On average, recessions last around 1-2 years. As the market is rapidly expanding, many businesses are facing huge revenue growth. Saving a percentage of profits rather than reinvesting them could provide crypto managers and directors with the resources to boost economic activity if the market faces a decline.

4. Recruitment and HR

Recruitment and human resource management should be the number 1 factor of all risk mitigation tactics.

DEI strategies in the workplace have been proven to increase innovation, and 45% of S&P 500 businesses with above-average diversity produced a greater proportion of revenue than competitors (Source: Forbes).

The 10% of crypto companies predicted to survive an economic recession will “dominate the game and boost returns for early investors” (Source: Investopedia).

Recovering from a recession - and preventing one - isn’t possible without the right in-house talent.

Recruitment With Source Control

We are the global experts in the placement services of technical professionals from low-latency and distributed systems engineering backgrounds into Blockchain, Crypto & HFT. We place top-tier talent at all skill levels from junior to executive hires on a permanent, contract, contingent, or retained basis. If you’ve been looking to advance your company, contact our specialist consultants today.


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