A survey of senior executives by The Block revealed a gap in the valuation of M&A transactions in the cryptocurrency market after the record pace of the first half of 2022.

Michael Ash, head of investment at Galaxy Digital, said he expects the market to remain strong due to attractive valuations for troubled firms. The market downturn could be a catalyst, he added, as the environment increases openness to such ideas.

The senior executive believes that many firms may have avoided acquisitions in the past year due to the rising costs of startups. His perspective is not typical for valuation during market downturns that lead to a reduction in M&A activity and postponement of plans to enter the market. public offering.

“Many are considering this option even when they are not ready to sell the business. This is a big change from last year when companies and founders were discouraged from mergers and acquisitions because they could raise money for a higher price than they could sell their business.” expert explained.

The publication recalled the problems of some industry participants such as Celsius, Voyager Digital and Three Arrows Capital. This forces them to consider the possibility of a M&A deal.

As a result, Nexo agreed to take over Vault, FTX.US entered into an option to buy the company with BlockFi, and Binance CEO Changpeng Zhao announced negotiations with more than 50 startups.

“We expect distressed companies to remain in this situation as their resources and capital are depleted. Private investment funds and banks will consider these as an opportunity to enter the sector.” Ash guessed.

Consulting firm Architect Partners was skeptical that the high pace of the first half of the year would continue into the year due to increased volatility. According to the Mergers and Acquisitions activity report, 49% of the transactions concluded are related to the takeover of crypto startups by traditional financial institutions.

Experts agreed that the new deals will be dominated by “problematic” firms. The biggest focus is on segments such as exchanges, infrastructure solutions, mining and market data.

“Valuations are falling but remain high compared to the IT sector and fintech in general because of growth potential for healthy companies.” they came to the conclusion.

Recall that in June, the media reported that the investment bank Goldman Sachs is ready to raise $ 2 billion to buy the assets of Celsius Network.

Previously, Lightspeed Venture Partners founded Lightspeed Faction with a focus on investing in the crypto industry.

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