PwC reports on major takeaways from 2020 with crypto M&A more than doubling its 2019 total

Despite a rough start to the year, 2020 has been a great year for the crypto industry, and this was confirmed with a new  PricewaterhouseCoopers (PwC) report issued by its Global Cryptocurrency Unit.

To dive right into the report, it states a couple of major takeaways from 2020:

1. The total value of crypto M&A in 2020 has more than doubled the total from 2019, with an increase of 131%. The $400 million acquisition of CoinMarketCap by Binance was one of the largest deals in the Crypto industry to date. The average deal size has also increased from US$19.2m to US$52.7m. 50% of the buyers of trading and exchange companies were existing crypto/blockchain companies who sought M&A to expand their offering as opposed to relying solely on organic means.

2. Crypto M&A deal activity continues to shift away from the Americas, with 60% of deals occurring in APAC and EMEA in 2020. However, majority of deal value still remains in the Americas.

3. Total value of crypto fundraising deals has increased by 33% in 2020. The average fundraising amount has also increased by 68%. The report included companies Robinhood and Revolut topping the list, although they are not exclusively crypto trading companies.

PwC considers the larger and more developed crypto companies becoming more active a clear sign that the crypto industry continues to mature.

PwC predicts the year 2021 to build on the 2020 success with an increasing increasing interest in crypto from retail and institutional investors following the positive market momentum, and we should not be surprised to see M&A in the broader trading sector to continue. PwC expects that:

1. Crypto M&A continues to be driven by larger players. PwC expects further consolidation in the industry with some of the larger, well funded or profitable firms continuing their M&A activities . In addition the firm expects the focus to be not on the acquisition of smaller competitors but rather of firms that offer ancillary services to their current offering (e.g. crypto media, data, compliance, research).

2. Institutionalisation of crypto industry will continue. The firm expects the rally in crypto markets, as well as the media attention around CBDCs, stablecoins, DeFi and NFTs, to serve as catalysts that should lead to the entry of even more institutional players in the market. And with this in mind, PwC predicts more institutional players entering in the crypto industry through investments or acquiring companies as part of their buy or build analysis in 2021.

3. Both M&A and fundraising activity will increase in 2021 based on the bull market of crypto assets in Q1 and this will influence APAC & EMEA in the remainder of 2021

The findings by PwC come at a time when more institutional players are entering the game while governments regulators are locking. The Bitcoin price has continued to rise in the last month, with price predictions towards the end of the year of above $200,000 largely relying on this continued adoption of large institutional players.

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