Cryptocurrency industry analysts believe mergers and acquisitions in the cryptocurrency sector could accelerate. They point out that more “healthier” players are looking for opportunities after the collapse of Three Arrows Capital (3AC) and Voyager.
Who will dominate the cryptocurrency sector
In addition, they highlight that, since 2021, mergers in the crypto-asset sector have been on the rise, having practically tripled in relation to the 59 transactions made in 2020.
According to data from the consultancy of M&A Architect Partners, in 2022 this trend continues to rise.
“Such activity in the first half of 2022 surpassed last year’s record pace,” the company said.
As Kavita Gupta, founder of Delta Blockchain Fund, highlighted, mergers and acquisitions activity is expected to increase.
“Many companies may not be able to overcome the current market downturn,” he said.
In that sense, she says, similar to the last crash, the market will see smaller companies with amazing technology becoming part of larger companies.
Gupta pointed to Polygon buying Hermez to create a better privacy solution as an example.
The executive even believes that Polygon will be highlighted in mergers and acquisitions in the coming months. Furthermore, she pointed out that, along with Polygon, will be FTX, Binance and StarkWare. FTX recently closed a deal to acquire BlockFi for $240 million.
In May, Ripple CEO Brad Garlinghouse said the company has a strong balance sheet and is on the lookout for potential mergers and acquisitions.
Only the strong survive
In addition, companies not involved in cryptocurrencies, but curious about the sector, can also be the target of acquisitions. Analysts note that positive regulatory moves will help with trading decisions.
Gupta pointed out that layer 1 companies, such as those driving Avalanche and Solana, have cash on hand:
“They are sitting on a chest of money and they are going to win the war,” noted Gupta.
But in Gupta’s world, companies may face stiff competition from Wall Street.
“This is a great time for Goldman Sachs and JPMorgan to buy crypto companies,” he said.
According to her, these companies can spend up to US$ 3 million in acquisitions now compared to US$ 10 million in the bull market.
Andy Long, meanwhile, said that the mining space is also ready for consolidation.
“I expect to see more than one public miner making acquisitions to accelerate their deployment and achieve cost synergies,” he said.