Crypto M&A has increased significantly in the past 2 years, and exchanges have been leading the charge in this regard. These crypto exchanges have bought competition to not only expand their operations, but stay one step ahead of their competitors. This has led to a buying frenzy in the market that has not slowed down despite the bear market.
Crypto exchanges take the lead
Naturally, in the crypto market, one would expect buying activity to slow down as the price of various digital assets begins to decline. However, this has not been the case in the bear market of 2022. Instead of backing off and taking a breather, crypto exchanges have used this market as an opportunity to acquire companies at a discount.
The search for the most attractive and lucrative acquisitions has seen major crypto exchanges make a number of acquisitions. Coinbase has led the charge with 8 acquisitions already recorded in the past two years, while FTX has made six acquisitions.
Most of these acquisitions have been in an attempt to expand into other markets during this time. In the case of FTX, it is the purchase of Japan’s Liquid Exchange, which is the largest in the country by trading volume. For Coinbase, I had purchased the purchase of Turkey’s largest exchange BTC Turk. At the same time, Gemini had acquired BITRIA, a comprehensive digital asset custody service.
Exchanges top mergers & acquisitions list | Source: Arcane Research
Why acquisitions?
One thing crypto exchanges always have is an ample supply of cash. This is because their business model is one that generates a lot of cash on a daily basis, leaving these exchanges in a position to quickly process an acquisition when an opportunity presents itself.
This is seen in the latest acquisitions of FTX and reported interest in buying crypto companies. The crypto exchange was recently approved to buy the assets of bankrupt lender Voyager Digital for $1.4 billion. It’s not stopping there, as the company is said to be eyeing the assets of another bankrupt lender, Celsius Network. Celsius had announced the deadline for bids, and FTX is also expected to bid. In addition to having the option to buy another crypto lender, BlockFi.
Total market cap remains below $1 trillion | Source: Crypto Total Market Cap on TradingView.com
Crypto exchanges also have a 360-view of the market, allowing them to determine which acquisitions are the best investments at once. Thus, they can easily find these opportunities and their ever-present cash flow allows them to make delicious deals on these companies.
In addition to Coinbase’s 8 acquisitions and FTX’s six acquisitions over the past two years, Gemini, Yearn, and Graph Blockchain have each had 5 acquisitions in the same time period.
Featured image from Blockchain News, charts from Arcane Research and TradingView.com
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