糖心视频

Editor鈥檚 note: Mergers & Money is a monthly column by Senior Reporter Chris Metinko that covers dealmaking and the flow of venture capital.

The crypto market has seen pretty much everything this year鈥�declining currency values, a drop in funding, the collapse of some coins and bankruptcies of some significant players in the industry.

Up next could be a spike in M&A dealmaking.

Crypto has not seen a massive amount of dealmaking, likely because the industry is still relatively young. However, the decline in the venture capital market combined with the drop in cryptocurrency prices could put pressure on companies seeking a way to stay alive.

鈥淚 absolutely expect a lot more consolidation in the space with many of the power players who have been profitable with strong balance sheets looking to pick up assets at depressed valuations,鈥� said , general partner at .

Deals taking shape

The sector already has seen some notable dealmaking in July. Earlier this month, cryptocurrency exchange 鈥攊n which Telstra Ventures is an investor鈥攕igned an agreement to give crypto lender a $400 million revolving credit facility that includes an option to buy BlockFi for up to $240 million. The deal represents a significant discount for FTX, as BlockFi raised $350 million at a valuation of $3 billion last March.

That M&A deal was the second largest in crypto of the year, behind the massive $1.5 billion purchase of crypto startup by fintech unicorn in April.

However, the FTX deal was not the only noteworthy deal announced this month The following week London-based crypto lender signed a term sheet that gives the company a 60-day exclusive exploratory period to acquire competitor .

In announcing the deal, Nexo , 鈥渢he current market conditions are to a large degree reminiscent of the Bank Panic of 1907, characterized by excessive leverage in the system, an overabundance of companies in trouble, and no lender of last resort. Today, it is again in the hands of a few capable and well-capitalized entities to come up with systemic solutions and aid the sector. As one of the few companies in a position to help distressed industry participants, Nexo takes this responsibility with the utmost seriousness.鈥�

Much more could be on the way for an industry pacing to have a record year of dealmaking. , total acquisitions of companies in the crypto sector through the first two quarters of the year stood at 39鈥攁 pace that would easily beat last year鈥檚 66.

About half those deals鈥�20鈥攖his year involved venture-backed companies, compared to 22 deals for VC-backed startups all of last year, .

The deepening crypto winter brought about by plummeting crypto values, the collapse of some stablecoins, and bankruptcies that have rocked the sector could force more founders to look for alternative solutions as venture funding in the industry slows.

鈥淚n many cases these M&A deals will not be favorable to existing shareholders and will happen as venture funding continues to dry up for all except the cream of the crop,鈥� Patel said. 鈥淭o be clear, there have been cases of significant up rounds done with companies such as and , but those are far and few.

鈥淚 do expect many of these M&A deals to happen, but it will primarily be distressed asset sales, where there are synergies for an acquirer to cross-sell into large user bases, proper regulatory licenses are available, and valuations are at cents to the dollar versus any premiums,鈥� he added.

The buyers

Some of the biggest names in crypto have already made deals this year, including New York-based , Boston鈥檚 and Los Angeles-based

However, the biggest player could still well be FTX, which isled by crypto billionaire who seems to be on a crusade to help crypto everywhere.

In June, it was Bankman-Fried鈥檚 quantitative crypto trading firm provided a $500 million loan to . The crypto lender for bankruptcy a few weeks later in an effort to restructure the company.

It also has been Bankman-Fried may have his eye on buying asset trading platform .

The growing regulatory environment around crypto also could see more traditional finance firms look at the space. With prices falling for many startups in crypto, older financial institutions that have been lukewarm may see now as a good time to make an exploratory buy while prices are low.

Whoever looks to acquire likely will find bargain prices if they hunt long enough鈥攁s a crypto winter could spring into a lush dealmaking season.

Illustration: