Mergers and acquisitions among cryptocurrency companies has more than doubled in the last year according to a new report for JMP Securities.
Despite a price drop of 54 per cent for Bitcoin, cryptocurrency firms are doing massive business through buy-outs and mergers, which indicates that enterprise tech companies are eager to get into the sector by any means necessary.
Satya Bajpai head of blckchain and digital assets investment banking at JMP Securities, told CNBC: “You’re seeing a mispricing of assets. Even for great businesses, the value of the token remains correlated to Bitcoin, which can create an ideal opportunity for strategic acquirers.”
Interestingly, when Bitcoin’s value was at its highest at the tail end of last year, 47 deals had been completed – a figure dwarfed by the 145 deals expected to go through before the end of 2018.
As pointed out by Bajpai, this could mean that the lower price of Bitcoin is allowing companies to invest in startups at a lower price. This is a win for those firms, as they get a working product and team more quickly than if they were to build it themselves.
“It’s expensive, but you get the technology and product immediately,” Bajpai continued. “This industry is like a treadmill – the only way to keep up on a treadmill is to keep running by investing in new technology… As soon as a company becomes interesting, they get bought – the deal size may still remain small, but the number of deals will increase because that’s the most viable and fastest way to grow in this environment.”