Research Insight: Crypto M&A might seem quiet, but it may be reaching an inflection point

According to data from Pitchbook and The Block, M&A activity within crypto and blockchain verticals has seen almost a 60% reduction in the total value of dollars spent in 2019 vs. 2018, due to muted M&A in the year (Kraken Futures and Xapo leading the way at a combined ~$155 million worth of investment) as well as a pair of $400 million deals for exchanges (Poloniex and Bitstamp) in 2018.

Acquisitions within these sub-sectors include crypto-related firms (either acquirer, the acquired, or both). Several transaction's deal sizes are unknown at this time.

Source: Pitchbook, The Block

Throwing 2018 out as an outlier funding year, there are almost 10 more deals (by our estimation) in 2019 vs. 2017, and ~50% more capital spent on these deals.

Last year, the top 10 largest M&A deals saw an estimated $1.2 billion worth of activity, led by: Poloneix ($400 million), Bitstamp ($400 million) Earn.com ($120 million), and CryptoGlobal ($80.7 million). So far this year has only seen ~$300 million worth as the bear market impacted the mining business particularly hard, which was one of the larger beneficiaries of crypto M&A last year. Assuming the Coinbase/Tagomi deal ends up going through, we can't help but wonder if 2020 is setting up for increased M&A action as custody and exchange providers look to consolidate and aggregate deposits/flow.

Source: Pitchbook, The Block

About the data

The following funding and M&A data into "Blockchain/Cryptocurrency" industry verticals comes from Pitchbook.

Pitchbook includes many broader companies with non-core business lines or strategies that involve "blockchain" or"crypto" businesses within its peer group, some of which include traditional software, IT services, and cyber-security companies. The data was cleaned and improperly classified companies & dollar transactions were removed within the top 200 rows, sorted by capital raised. It's important to note there may still be some inconsistencies beyond these values we report.

The Block has also added its own data set based on due diligence of deals that occurred over the last 4 years, and were not picked up by Pitchbook.