Bitwise Cuts Staff by 14% as Crypto Market Slump Deepens

Bitwise Asset Management has cut 14% of its staff. The firm confirmed to Bloomberg that headcount fell from about 180 to roughly 155 people.

The layoffs affected about 25 employees at the firm, which manages $9 billion in client assets across more than 70 products, including a $2.3 billion spot Bitcoin ETF. The cuts land in the tenth month of a prolonged market slump.

A quarter of the team left at once

According to Bloomberg, roughly 25 people left the company, nearly a quarter of the workforce as of the start of the year. Bitwise, headquartered in San Francisco, tied the decision to the crypto market downturn. A company spokesperson confirmed to Cointelegraph on Wednesday that the move stemmed from market conditions rather than any internal problem at the firm. Despite the cuts, CEO Hunter Horsley said the remaining team is still the largest in the firm's eight-year history. Leadership still expects growth, he said, as crypto "further integrates into the global economy."

Bitwise joins a lengthening list of 2026 layoffs

The 14% figure matches the cut Coinbase made in May. CEO Brian Armstrong pointed to market conditions and how quickly AI had changed the pace of the company's work. In June, BitGo co-founder and CEO Mike Belshe announced a "one-time action" trimming staff. Prime broker FalconX cut roughly half its Singapore office in early August and withdrew a license application in the city-state to focus on derivatives. Analysts also list Robinhood, Polygon and Pump.fun among the companies that reduced headcount this year, each citing its own reasons, from shifting to AI tools to market pressure.

Two exchanges went further and shut down entirely. BitMEX, which invented the perpetual swap back in 2016, announced it will close on September 23 after more than 11 years. BitMart wound down its nine-year-old platform, and its token dropped in price right after. In scale, the 2026 wave resembles the 2022-2023 downturn, though most companies involved are still profitable this time. Executives are managing costs proactively rather than reacting to losses. Margins compress faster than revenue does, so staff gets cut before the strain shows up in earnings.

$9 billion in assets, under 3% of the spot Bitcoin ETF market

Bitwise manages roughly $9 billion in client assets across more than 70 products: ETFs, separately managed accounts, private funds, hedge fund strategies and staking. The firm's largest asset, its spot Bitcoin ETF, holds about $2.3 billion. That is under 3% of total US spot Bitcoin ETF assets.

Bitwise entered the crypto index fund business long before spot Bitcoin ETFs existed. For years the firm offered institutional investors diversified baskets of digital assets, only becoming an ETF issuer after the SEC's approval in January 2024. That history is why its lineup of more than 70 products looks broader than rivals that concentrated on one or two flagship funds.

Liquidity favors the leaders too. The smaller a fund's assets under management, the wider its bid-ask spread on exchange, and the more expensive it gets for a large institutional client to enter or exit a position. For a retail investor, that translates into hidden costs even when the fund's stated fee looks reasonable next to the flagship players.

Capital is draining from small funds into the top three

The cuts stem mainly from the drawn-out price slump. Bitcoin trades around $64,000, nearly half its October 2025 record. The decline has now run for about 10 months.

Smaller providers lose out on scale. Flagship funds from BlackRock and Fidelity can sustain lower fees through sheer asset volume, while smaller players like Bitwise offset thin margins with operational cuts. It is a familiar consolidation pattern in finance. The first few players absorb most of the new capital, and everyone else fights over what is left.

Analysts expect some smaller ETF providers to either wind down unpopular products or agree to a merger with a bigger player over the coming quarters. For clients, that carries the risk of a forced share conversion into another fund, or a product line closing without much advance notice.

More than a dozen issuers currently compete in the US spot Bitcoin ETF market, including VanEck, ARK and Grayscale. Yet the bulk of new capital has flowed to the top three for years, leaving the rest to fight over a share that keeps shrinking along with the total market.

• Spot trading volume on the top 10 centralized exchanges fell 27.9% over the quarter, to $1.95 trillion
• Total crypto market capitalization dropped 12.6% over the same period
• Notional volume on prediction markets rose 48.7% instead, to a record $113.8 billion
• Retail investors are shifting toward sports betting and AI stocks, Barclays analysts say

What Bitwise's own team is saying

Top executives remain upbeat despite the cuts. Chief investment officer Matt Hougan said this week that the market is likely near the bottom of its cyclical winter. He noted that attackers drained tens of millions of dollars from self-custody wallets in just the past few weeks through phishing and compromised hardware devices. That wave of thefts has already taken more than $100 million. That, Hougan argued, only strengthens the case for holding Bitcoin through an ETF rather than directly, even though it adds reliance on a traditional financial intermediary.

What it means for the market

Layoffs at a major ETF issuer are a symptom of the slump, not its cause. The market is consolidating. Capital keeps flowing to the top three funds while smaller players like Bitwise cut costs to survive the winter. For retail buyers, the Bitwise story adds another argument for a more diversified approach to the asset. Some keep choosing ETFs, others opt for a direct Bitcoin-to-dollar exchange through P2P platforms, where price forms without a fund's premium or discount attached. At the same time, regulators keep approving adjacent products, including a staking-enabled Ethereum ETF, so competition for a shrinking pool of new capital will only get tighter. The next round of quarterly reports will show whether the outflow from smaller players slows before the price finds a bottom. For retail investors, the simplest check before picking a fund is looking at assets under management and the average spread over the past month, not just the headline fee.