The American crypto industry had plenty to celebrate this week: Bitcoin came within inches of reaching its all-time high price, crypto ETFs rang in new milestones on Wall Street, and next week’s presidential election appears poised to boost the ecosystem regardless of who wins. 

You’d hardly notice, then, that it was one of the worst weeks ever for America’s top crypto employers. On Tuesday, Ethereum software giant Consensys laid off 20% of its global workforce. Hours later, DYdX, a New York-based decentralized crypto exchange, cut its team by 35%. The next morning, Kraken, one of America’s largest crypto exchanges, slashed its headcount by 15%. 

Rounding out the week, Coinbase reported a disappointing Q3 that missed targets, and an overall decline in customer activity. What gives?

Experts told Decrypt a multitude of factors may be at play—ranging from shorter term election- and regulation-related anxieties that may resolve soon, to more existential issues concerning the place for crypto-native companies in an industry increasingly populated by traditional finance giants.

“This is definitely the most bearish bull market of all time,” Alex Tapscott, managing director of digital assets at Ninepoint Partners, told Decrypt. 

While rosy headlines about crypto’s rising tides may appear omnipresent, that narrative really only pertains to Bitcoin, which is more than ever “in a league of its own,” Tapscott said. 

And even Bitcoin’s strength is no longer necessarily the crypto industry’s gain.

“Yeah, Bitcoin’s price went up a lot, but where did that inflow go?” Owen Lau, a senior analyst at investment firm Oppenheimer & Co., told Decrypt. “It's going into traditional finance companies, as opposed to crypto-native companies.”

With Wall Street titans like BlackRock scooping up billions of dollars worth of Bitcoin trades through its exchange-traded fund thanks to brand trust and rock-bottom fees, crypto exchanges like Coinbase and Kraken are getting left out in the cold, Lau said. Companies tied to sagging cryptocurrencies like ETH—such as Consensys—are faring even worse, he added. (Disclosure: Consensys is one of 22 investors in Decrypt, which is editorially independent.)

Fears related to regulatory uncertainty and the looming presidential election may also be playing a substantial role in chilling crypto activity and investment—at least for the moment. 

Kristin Smith, CEO of the Blockchain Association, a leading crypto lobbying group, told Decrypt that while she is optimistic that both a Trump and Harris administration look poised to bring regulatory clarity and support to crypto, the current U.S. Security and Exchange Commission’s hostility to the industry has done substantial damage to business that won’t be remedied until next year at the earliest. 

“A lot of the capital, I think, is sitting on the sidelines, and is nervous about coming into this space until they see some more clarity,” Smith said. “So I do think the regulatory issues and the political issues are a big factor in all of this.”

Earlier this week, the Blockchain Association launched an initiative to track how much money leading crypto firms have spent on lawsuits initiated by the SEC. It says that figure is already in excess of $400 million. On Tuesday, when Consensys announced it would lay off 20% of its staff, the company’s CEO, Joe Lubin, said the staff cuts were linked to the “many millions of dollars” Consensys has spent defending itself against the SEC in court.

And yet, some experts insist crypto’s woes won’t fade away even if the U.S. government embraces the industry. Oppenheimer’s Lau thinks the current landscape of crypto-native companies—particularly centralized exchanges—is much too overcrowded, and that many such companies will end up either dying out or getting acquired by traditional finance firms. 

“I don't know why the market would allow 200 exchanges in the world,” he said. “It doesn't make sense to me.”

Ninepoint’s Tapscott, meanwhile, thinks it’s going to take a lot more than getting rid of SEC Chair Gary Gensler to unleash a true crypto bull market. 

“It’s not just the election,” he said. “If you look at previous cycles, there’s always been some set of new applications or capabilities that got people really excited.”

Tapscott points to the landmark innovations of decentralized applications (dapps) or NFTs, both of which propelled crypto markets to then-unprecedented highs. 

“This time around, is there something that has galvanized people in quite the same way?” he said. “I think the answer is, not yet.”

While the prospect of politicians and Wall Street embracing crypto is certainly exciting, Tapscott added, that development has not been sufficient to kickstart a true industry-wide bull run—and can’t replace the zeal generated by a bonafide new use case for blockchain tech. 

“How do you do something with the technology that wasn’t possible before?” he said.