The cryptocurrency market has remained hot following the election as many imagine a change in the White House will provide a friendlier environment for digital currencies.
Could the surge also awaken the long-dormant M&A market for cryptocurrency startups, especially as funding in the sector has declined for several years and many private corporations could also be looking for a rescue?
The M&A deal environment has never really appealed to VC-backed startups in the industry. The high point for the market was 2022, when only thirty deals were accomplished, in keeping with Crunchbase data.
So far this yr, over twenty transactions have been accomplished, but only one transaction had the announced value of any real note: Robinhoodpurchased by Global Exchange in June for $200 million Bit stampwhich has over 50 lively licenses and registrations worldwide.
Time to make deals
However, cryptocurrency dynamics may have modified in recent weeks due to the former president Donald Trumpelectoral victory.
Many in crypto are like this considering Trump’s victory as a breakthrough moment for the industry as the federal government appears able to embrace digital currencies. Trump’s victory too probably means getting kicked out With KNOT Chairman Gary Genslerwhich has taken a rigorous enforcement approach to cryptocurrencies.
Bitcoin prices have surged nearly 40% since the election and hit a latest high above $94,000 on Wednesday, while Ether is up about 25% above $3,000.
More importantly for trading purposes, the shares of major players in the cryptocurrency market have skyrocketed. The biggest winner so far has been the cryptocurrency exchange and cryptocurrency wallet platform Coinbasewhose shares have increased by almost 60% since the election. Robinhood and the cryptocurrency miner Mara Holding also saw significant growth, with shares of each corporations rising by roughly 40%.
The increase in share prices is essential because it signifies that these corporations may look more favorably at using their shares in takeover transactions. No company likes to make a stock trade when they feel their shares are low – or overvalued – but when they are approaching 52-week highs, attitudes change.
Some of those large corporations have made acquisitions in the past. Robinhood was mentioned earlier, but in keeping with Crunchbase, Coinbase has also accomplished twenty mergers and acquisitions in its history data.
That includes one deal this yr: Coinbase’s acquisition of a San Francisco-based company Utopia Laboratories for an undisclosed amount just last week. The startup has developed an operating system for decentralized autonomous organizations to administer payment requests and payroll.
You might have money
A jump in the share prices of some cryptocurrency-related corporations could come at a needed time for many startups.
Venture funding has declined significantly in the sector over the past few years. So far this yr, cryptocurrency startups have raised just over $3 billion from investors in over 500 deals, in keeping with Crunchbase data.
Based in Montreal Block streamdeveloper of blockchain digital asset infrastructure, raised the largest round of the yr so far – $210 million in the type of convertible notes.
Overall enterprise dollar and transaction amounts are significantly lower in comparison with the industry highs set in 2021 – when cryptocurrency startups raised an astonishing $21.5 billion in over 1,400 rounds.
Then in 2022, investors poured $15.6 billion in enterprise capital into cryptocurrency startups across greater than 1,500 deals.
Many startups are currently looking for money to survive in a given environment where enterprise capital dollars have declined. For many, acquisition is the only real path forward. Right now, it looks like it could possibly be a good time for mergers and acquisitions for these corporations – even in a sector where mergers and acquisitions are rare.