The delayed cryptocurrency bear market has experienced a significant number of organizations finding new prospects for development through consolidations and acquisitions. According to reports, investors are searching for further details, even at a time of lower crypto prices.
Regardless of market instability and a peak-to-trough bitcoin price drop of almost 70 percent, 2017 has seen an increase in merger and acquisition activities in 2017 as disclosed by data from JMP Securities and PitchBook.
The data states that token values connected with startups are still correlated to bitcoin instead of actual company value. This is possibly logical when taking into account the fact that bitcoin has been in existence for more than 10 years, which makes it an elder statesman as opposed to most of the crypto industry.
Satya Bajpal, a specialist consultant on mergers and acquisitions and head of the blockchain and digital assets investment banking at JMP, explained the situation.
In his words:
“Even for great businesses, the value of the token remains correlated to bitcoin, which can create an ideal opportunity for strategic acquirers.”
Bajpal calls the present strategy used by most investors as a “land grab” technique, where they are forced to purchase instead of building. Explaining that building takes a longer period, he explains companies gain from the expensive alternative of buying due to the fact that the acquired entity already has some technology and usually market-ready products.
Bajpal went on to explain that the approach is also a land grab for talent as the new entity gains from having employees with business and technical backgrounds due to the fact that blockchain engineers are hard to see. He precisely mentioned the example of Coinbase’s acquisition of Earn.com, which witnessed Earn’s founder and CEO becoming Coinbase’s first-ever CTO.