JMP Securities Research: ‘Crypto Winter’ is an Opportune Time for Mergers and Acquisitions


On October 18th, CNBC published a report that showed a surge in merger and acquisition (M&A) activity involving cryptocurrency. The surge, being called a “deal frenzy,” is how the 200% increase is being described.

In the information regarding the M&A deals, research and data from JMP Securities for PitchBook show that there are already 115 of them closed by October 15th. The data indicates that the total by the end of the year will be at least 145 deals, and it covers a wide range of deals.

Some of those deals include majority investments, full acquisitions, and partial acquisitions. None of the sizes of these deals are revealed, but JMP believes that the majority of them are under $100 million.

Despite this impressive surge, Bitcoin isn’t seeing the recovery it has been needing. Since the beginning of 2018 alone, it has gone down by 53% in price. This pattern was mimicked last year, when there were only 47 deals last year and Bitcoin reached the record $20,000 price tag.

The head of blockchain and digital assets investment banking for JMP Securities, Satya Bajpai, is calling this current season in the industry a “crypto winter,” though it is a great opportunity for the groups and individuals to easily access technology and talent to grow in it. Bajpai alleges that the downtrend of Bitcoin is the cause of the rest of the suffering in the market, adding,

“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.”

Based on his observations, he believes that this increase in activity is a “land grab,” saying that the innovation is pushing the individuals to purchase instead of start from the bottom. He said,

“[The M&A route is] expensive, but you get the technology and product immediately. This industry is like a treadmill – the only way to keep up on a treadmill is to keep running by investing in new technology.”

Bajpai believes that the use of M&A deals makes it easier for investors to gain access to a community or user base. With that kind of outlook, he believes that this is just another way that the deal provides “the most viable and fastest way to grow” within the space.

However, the new sector makes a few things more difficult, like the lack of ability to purchase a traditional equity state in a project. Instead, investors are forced to invest in whatever token is associated with it.

There have been other individuals that match the beliefs that Bajpai holds, seeing this bear market as an opportunity to get involved in the crypto world. Venture capital investor Garry Tan is among the optimistic voices, writing on Twitter that the

“crypto winter […] makes it safer for super-long-term oriented Yale-model institutions to enter at a price that isn’t dangerous.”

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