Cryptocurrency M&A activity has reached a record high as prices remain depressed, according to JMP Securities’ Satya Bajpai.
As the cryptocurrency market continues to struggle to break free from bear territory, opportunists are looking at the slump as their chance to catch a deal. Blockchain and crypto M&A deals have surged this year, climbing from 47 in October 2017 to 115 currently. And according to JMP, it could reach as high as 145 by the end of 2018.
Though JMP wasn’t able to pin an exact figure on the average transaction involved in these M&A deals, the securities firm noted that the majority of the deals were “relatively small,” with most carrying a price tag of less than $100 million.
Head of the blockchain and digital assets investment banking at JMP, Satya Bajpai, noted, “You’re seeing a mispricing of assets,” adding, “Even for great businesses, the value of the token remains correlated to bitcoin, which can create an ideal opportunity for strategic acquirers.”
Bajpai also explained the complexity of the space, from valuations to the sheer speed at which the industry is moving.
“As soon as a company becomes interesting, they get bought — the deal size may still remain small, but the number of deals will increase because that’s the most viable and fastest way to grow in this environment.”
Coinbase leads the M&A charge
While the number of deals continues to rise, Coinbase may be the most notable company taking advantage of the opportunity to grow its portfolio.
Following in the footsteps of its largest investor, Digital Currency Group, Coinbase has been on somewhat of a tear this year. Out of its 10 total acquisitions, 8 of them came this year, including the especially noteworthy buyout of Keystone Capital, positioning Coinbase as an officially regulated broker.
In addition to Keystone, Coinbase also swallowed up Earn.com and decentralized exchange, Paradox, harnessing both the technology behind these platforms and the personnel to propel forward in its endeavors.
Crypto companies are going head to head with Big Banks
While Coinbase’s acquisition of Keystone Capital was especially noteworthy, other strategic acquisitions from the likes of Lightyear Corp. (the commercial arm of the Stellar Development Foundation), Circle and Binance show that the industry is beginning to get serious about the business side of things.
As the cryptocurrency and blockchain industry has grown, many are no longer looking to compete against one another, but against the already-established finance giants such as ICE, JPMorgan, and Goldman Sachs, and because of that, M&A activity will likely continue to soar.