Bitwise Layoffs Expose the Real Cost of Crypto Slumps
The pressure highlights how falling crypto prices can reduce asset-manager revenue even without investor withdrawals.
Summary:
- Bitwise cut about 14% of its workforce, reducing headcount to roughly 155.
- Its flagship BITW fund lost 31% of net assets during the first seven months of 2026.
- The cuts come despite Bitwise continuing to invest in staking and new products.
According to information from Bloomberg, Bitwise Asset Management has cut roughly 14% of its workforce, eliminating about 25 positions and reducing its global team from around 180 to 155 employees, as the prolonged digital asset downturn begins to weigh more visibly on crypto asset managers. In an email to The Block, CEO Hunter Horsley confirmed the restructuring via E-Mail, while maintaining that Bitwise expects to resume hiring as adoption expands, but the deeper issue is the economics behind the decision: when an asset manager earns fees as a percentage of client assets, falling crypto prices can compress revenue even if investors do not actively pull their money.
Falling crypto prices hit an asset manager twice
The immediate explanation for the cuts is weaker digital asset markets, but Bitwise illustrates why a downturn can be particularly difficult for an investment manager.
Unlike an exchange, which primarily depends on trading activity, an asset manager earns much of its revenue from management fees charged against assets under management. When Bitcoin, Ethereum and other holdings decline, the value of those assets falls automatically.
That means revenue can shrink even if a fund experiences zero net redemptions.
Bitwise’s flagship Bitwise 10 Crypto Index ETF provides a useful example. Its net assets fell about 31% during the first seven months of 2026, according to reporting on the layoffs. Financial Times market data put BITW’s net assets at approximately $574 million as of July 31.
The distinction between price-driven asset declines and actual investor withdrawals matters. A lower AUM figure does not necessarily mean clients abandoned the product. It can simply reflect the falling value of the crypto assets inside it.
For Bitwise, however, both have the same initial effect on fee revenue: a smaller asset base on which to charge management fees.
Why a 31% decline in fund assets can force cost decisions
Consider the economics from the manager’s perspective.
If a fund charges a percentage of assets each year, a 30% decline in its asset base can reduce the revenue generated by that product by roughly the same proportion before accounting for inflows, outflows or fee changes.
Employee expenses behave differently. Salaries, benefits, compliance teams and technology costs do not automatically fall because Bitcoin does.
That creates operating leverage in reverse.
During bull markets, rising crypto prices can expand assets and fee income faster than headcount. During prolonged declines, the same model can leave an asset manager with a cost base designed for substantially higher AUM.
Bitwise’s reduction from around 180 employees to 155 therefore looks less like an emergency retreat and more like an attempt to resize fixed costs to current market conditions. Horsley said the remaining workforce is still the largest in the company’s eight-year history and that the firm expects to grow again as crypto becomes more integrated into the global economy.
What the layoffs reveal about Bitwise’s business
- Workforce before cuts: Approximately 180 employees
- Positions eliminated: Roughly 25
- Workforce reduction: About 14%
- Remaining workforce: Approximately 155
- Reported assets under management: Around $9 billion
- BITW asset decline in 2026: Approximately 31%
- BITW net assets at July-end: Roughly $574 million
- Bitwise product lineup: More than 70 products globally
Bitwise is cutting staff without abandoning expansion
The restructuring becomes more interesting because Bitwise has not responded to the downturn by simply freezing investment.
Earlier this year, it acquired institutional staking provider Chorus One, which had more than $2.2 billion in staked assets when the transaction was announced. Chorus One became part of Bitwise Onchain Solutions, expanding the manager beyond investment products into infrastructure used by institutions to generate staking rewards across blockchain networks.
Bitwise also continues to operate a broad lineup spanning ETFs, separately managed accounts, private funds and staking products. Its website currently lists more than 70 offerings globally.
That creates a more nuanced interpretation of the layoffs.
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Bitwise appears to be reducing operating costs in parts of the existing organization while continuing to invest in businesses it expects to matter as institutional crypto markets mature.
The Chorus One acquisition is particularly relevant because staking revenue behaves differently from a simple management fee.
Owning more of the underlying infrastructure gives Bitwise another potential revenue source beyond charging investors for packaged exposure to crypto prices.
The crypto industry is learning that ETF adoption does not remove cyclicality
The arrival of regulated crypto ETFs was sometimes interpreted as a step toward making the industry less dependent on boom-and-bust cycles.
Bitwise’s cuts suggest that institutionalization changes the structure of that cyclicality rather than eliminating it.
ETF managers may have steadier customer relationships than retail exchanges, but their economics still depend heavily on asset prices. A Bitcoin ETF can retain every investor and still suffer a substantial decline in fee-generating assets when Bitcoin falls.
Exchanges face a different version of the same problem. Coinbase cut roughly 700 positions, or 14% of its workforce, in May, as subdued trading volumes and weaker crypto markets pressured revenue.
Gemini took an even more aggressive approach earlier this year, announcing plans to eliminate as many as 200 jobs, about one-quarter of its workforce, while withdrawing from several international markets to reduce expenses.
The layoffs also echo Polygon Labs‘ recent restructuring, where the company cut jobs while doubling down on payments infrastructure rather than retreating from product development. Robinhood, BitGo and the Ethereum Foundation also trimmed staff in recent months, reflecting broader cost-cutting efforts across the digital asset industry.
The mechanisms differ. Exchanges suffer when customers trade less. Asset managers suffer when the assets they manage become less valuable. Both models remain highly sensitive to the crypto cycle.
Why Bitwise can be bullish on crypto while cutting employees
There is no inherent contradiction between Horsley’s long-term optimism and the decision to reduce staff.
An asset manager can expect the industry to become much larger over several years while simultaneously concluding that current revenues cannot support a workforce built during stronger market conditions.
Bitwise has repeatedly argued that institutional adoption will broaden as banks, wealth managers and financial advisers increase digital asset exposure. Horsley’s position is that the firm’s current restructuring leaves it capable of participating in that expansion when conditions improve.
The relevant question for investors is therefore not whether Bitwise’s executives remain bullish. It is whether the business can preserve enough product development, distribution and infrastructure capacity during the downturn to capture assets when demand returns.
Cutting too little leaves the company carrying excessive fixed costs. Cutting too deeply risks weakening the teams needed for the next growth phase.
The next test is whether diversification offsets lower fund AUM
BITW’s declining asset base makes the pressure from weaker crypto prices visible, but Bitwise is increasingly larger than any single index product.
The firm’s next phase will test whether ETFs, staking infrastructure, separately managed accounts and institutional services can generate a more diversified revenue mix than the company had during earlier crypto cycles.
That is where the Chorus One acquisition becomes strategically important. If onchain services can produce recurring institutional revenue even when token prices are weak, Bitwise may reduce the sensitivity of its business to pure asset appreciation over time.
For now, the layoffs indicate that diversification has not eliminated that sensitivity. The next useful evidence will come from fund flows, total client assets and growth in Bitwise’s staking business. Those numbers will show whether the 14% workforce reduction represents temporary cost control during a weak market or the beginning of a more fundamental change in how crypto asset managers structure their businesses.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Zdravkov
Reporter at CoinsPress
Alexander Zdravkov is a market analyst and crypto journalist with interests in economics, broader financial markets and digital assets. His journey into crypto began more than four years ago, driven by a fascination with the rapid evolution of blockchain technology and the transformative potential of decentralized finance. He began analyzing market cycles and identifying emerging trends before they reach the mainstream. He holds a degree in International Relations - a background that helped shape his broader perspective on global economics, geopolitics, and the interconnected nature of modern financial markets. Whether covering the latest developments in the crypto sector or exploring broader macroeconomic themes, Alexander focuses on giving readers context rather than simply repeating headlines. During his career, he has authored more than 10,000 articles covering cryptocurrencies, traditional finance, and global market developments. His work spans everything from Bitcoin and altcoins to macroeconomic trends influencing risk assets worldwide.
