Crypto M&A Slows As Its Own Type Of Winter Sets In

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After a fast start to the year, M&A deal-making in crypto has hit its own type of winter.

Earlier this month, one-click checkout company Bolt dropped plans to buy crypto and payment infrastructure company Wyre for $1.5 billion. The news came just more than three weeks after digital asset investment firm Galaxy Digital called off its proposed $1.2 billion acquisition of Palo Alto, California-based BitGo.

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The abandoned dealswith about $2.7 billion combinedhelp illustrate what appears to be a cooling M&A landscape as the crypto industry tries to find its level after hitting all-time highs last year.

The market

According to Crunchbase data, M&A activity targeting VC-backed crypto startups hit an all-time high in the first quarter of the year when 16 were announced. However, deal pace has reverted to barely a trickle, with just seven deals in the last nearly two full quarters.

While deal count has slowed to a drip, there also have not been many large deals. Silvergate Banks purchase of the tech assets of blockchain-based payment network Diemthe stablecoin originally developed by Facebook engineersfor $182 million is the largest deal involving a VC-backed entity for the year.

Perhaps that should not come as a surprise given the current market conditions. All of the dealmaking announced in the first quarter came just weeks or months after Bitcoin and many cryptocurrencies hit all-time highs in November with Bitcoin itself flirting with $68,000.

Since those heady days, Bitcoin has fallen more than 70% and has frequently traded below $19,000.

Just as investors have abandoned the cryptocurrency market, some venture investors also have slowed the pace of their investment in the sector. Investment in VC-backed crypto companies slowed during the first half of the year and seems unlikely to hit last years high of nearly $19 billion.

M&A deal-making seems to have followed suit, as companies like Bolt and Galaxy Digital had second thoughts on the deals both companies announced in the second quarter to much fanfare before calling them off in Q3.

Looking for a deal

That is not to say that deal flow will continue to be slow or completely stopin fact, it could pick up.

It only makes sense for companies that announced deals early in the year to pull out as valuations around the crypto sector have dropped. Those drops in valuations could bring in more buyers as companies and individuals look for a good deal.

FTX CEO Sam Bankman-Fried has shown he is more than ready to look for possible deals and said in a recent interview with CNBCs Squawk Box that the exchange giant has at least $1 billion to use on acquisitions and bailouts.

FTX is the front-runner to buy the assets of crypto lender Voyager Digitalwhich filed for bankruptcy in JulyCoinDesk reported last week.

Crypto exchange giant Coinbase also has made its intentions in the space clear. During the companys Q2 earnings call last month, Coinbases President and COO Emilie Choi said the company will continue to be active across both ventures and M&Adding that those tools have helped the company gain access to innovation in the crypto ecosystem.

It’s an area that has helped us gain access to the innovation happening in the crypto ecosystem, she said. And crypto winters we view as builders markets. It’s often the best time for us to be greedy when others are fearful.

To see more of our Web3 coverage, visit Crunchbases Web3 Trackera new site to look at startups, investors and funding news concerning all aspects of Web3, cryptocurrencies and blockchain.

Illustration: Dom Guzman

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