Crypto M&A hits new all-time highs

The crypto market is booming, with the total value of its M&A deals increasing fifty-fold over the past year. For the first time, several deals were worth more than $1 billion each. A recent study shows it. There is also no end to the recovery in sight in 2022.

The trend towards digitization has permanently changed our daily lives and the business world. Banks and savings banks are registered later than other sectors, but no less severely. In the Bank Blog you will find current studies on this important subject.

Over the past year, takeovers and mergers have been extremely popular in the crypto industry, with the total value and number of crypto transactions increasing sharply in 2021. This is shown by a study by the firm of crypto. PwC management consulting on the current market situation and the latest trends in the crypto industry.

According to this, the total value of M&A transactions in the crypto market increased fifty-fold to more than $55 billion, an increase of 4,846%. The number of transactions increased to more than 390. For the first time, several transactions were worth more than US$1 billion. Additionally, major crypto companies would increasingly enter the business of transactions and takeovers. According to the authors of the study, this is an indication that the market is growing and taking hold.

The average crypto M&A deal size has also increased significantly, amounting to $179.7 million in 2021.

Development of M&A activities in the crypto market (2019-2021)

The development of M&A activities in the crypto market.

America has the most offers – Europe the highest overall value

In America, at 51%, most deals have expired. There were 33% of redemptions in the EMEA economic region (Europe, Middle East and Africa). 16% of M&A activity took place in the APAC (Asia-Pacific) region.

The EMEA region recorded the highest total value of mergers and acquisitions. According to the study, this is mainly due to the fact that some SPAC transactions worth up to $8 billion each took place in this region.

The largest transactions were concluded in America ($22.4 million). It is followed by Asia-Pacific ($7.1 million) and EMEA ($4.8 million).

Switzerland in particular occupies a key position in the crypto industry, as the authors of the study write. The Swiss would have advantages due to their excellent market environment and technological lead. Therefore, the Alpine country is particularly attractive for investors.

The rest of the economy is taking the crypto market seriously

The study also suggests that M&A deals in 2021 will be spread more evenly across different sectors than in previous years. In 2020, for example, mergers and acquisitions were mainly in the retail sector – this hegemony dissolved the following year. According to the authors of the study, this indicates that the crypto market is becoming more accepted by the economy.

The biggest investors are venture capitalists and incubators

As recently as 2019 and 2020, crypto and blockchain companies accounted for around 50% of M&A deals. In 2021, this proportion fell to 16%. Traditional venture capitalists and incubators have caught up and now form the largest group of investors in the M&A space. Data and infrastructure companies are among the most sought after items to buy. Six of the top 10 deals of 2021 were in this area.

Crypto funding is through the roof

According to the study, crypto companies raised $34 billion in funding in 2021. This is not only eight times more than in 2020 and a 645% increase, but also a new all-time high. To enable new fundraising offerings, 49 crypto funds were also launched in 2021.

The outlook for 2022

The authors of the study are of the opinion that the significant increase in transactions shows that the sector can be expected to remain dynamic in the future. Many new funds and abundant capital would lead to further growth. A key question remains whether crypto companies will continue to use SPACs as a funding channel.

In 2022, new concepts like NFTs, DeFi, Web 3.0 or Metaverse would also gain prominence in the crypto market. However, we can expect an increase in financing transactions and a decrease in mergers and acquisitions.

Last but not least, the industry would continue to establish and grow. Crypto companies are reportedly using mergers and acquisitions this year to spur product expansion into other markets and speed up licensing.

You can download the “2022 Global Cryptocurrency Mergers and Acquisition and Fundraising Report” study directly here.

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PwC is Germany’s leading auditing and consulting firm and a partner of the banking blog.

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