Mergers and acquisitions in the cryptocurrency sector this year could reach $1.9 billion despite Covid-19 affecting the global economy
A report by PricewaterhouseCoopers (PwC) published earlier today reveals that the mergers & acquisitions (M&A) in the cryptocurrency sector could reach $1.9 billion by the end of 2020, despite Coronavirus affecting the global economy.
According to the PwC report, $597 million was spent on 60 deals in the first half of the year. The figure has surpassed the $481 million spent in the entirety of 2019 (a total of 125 deals).
The PwC data obtained from M&A data firms Capital IQ, MergerMarket, Crunchbase and Pitchbook showed that the Binance acquisition of Coinmarketcap for $400 million was one of the largest in the history of the crypto market and the most significant this year.
“The total value of crypto M&A in the first six months of 2020 has already surpassed the total from 2019. The average deal size has increased from $19.2 million in 2019 to $45.9 million in 2020,” the report added.
The largest share of deals were executed by crypto exchanges looking to expand their business. PwC reported that 74% of the acquisitions were by crypto exchanges who are leveraging M&As to expand their offering instead of relying solely on organic means of growing their business.
The trend is expected to continue. PwC expects further consolidation in the crypto sector, with some of the larger and more profitable companies continuing their M&A activities.
PwC also presented some interesting facts about the shifts within the cryptocurrency space. There is a geographic shift in terms of cryptocurrency deals. Crypto M&A deals continue to shift away from the Americas to other regions. 57% of deals in the first half of 2020 took place in Asia-Pacific (APAC) and Europe, the Middle East and Africa (EMEA) regions. This is up from the 51% recorded in 2019 and the 43% the year before.
The move away from the Americas is expected to continue for the remainder of the year. PwC stated that “We expect to see this trend continue for the rest of 2020, especially with large parts of APAC opening up again from COVID-19.”
PwC believes that the industrialisation of the cryptocurrency sector will continue to expand over the coming years. The institutional interest in digital assets will continue to rise due to talks surrounding central bank digital currencies, Libra and increased regulatory clarity. For this reason, PwC predicts M&A deals and fundraising processes by industry players targeted at building solutions for institutional players.