It’s being called the Crypto Winter, and it’s cold out, freezing even.

This does, however, imply there’ll be a Crypto Spring. For many, though, this will never happen; companies will just disappear, and others will be eaten. Consider that Bitcoin is only 13 years old, Ether only 7. They may be bottoming out, but they are young. They will be back. Many won’t. As of July 2022, there were 20,268 cryptocurrencies. Sam Bankman-Fried, chief executive of FTX, believes that only about 50-100 tokens have value. “The remaining thousands...do not have value.”

Tech expansion has been explosive for the last decade, and given the early stage of the category, there hasn’t been a ton of deals. That’s changing. As with most tech sectors, rapid expansion and fragmentation invariably lead to contraction and consolidation. Given the bloodbath the crypto market has seen – from the collapse of stablecoins, declining currency values, radical drop in venture funding, the collapse of some crypto coins, and bankruptcies of some service players, it’s time for the strong to eat the weak.  

Consolidation is the inevitable outcome. With funding hard to come by and debt expensive, mergers look to be the trend for 2022. Much more could be on the way for the industry on pace to have a record M&A year. According to Crunchbase, “Total acquisitions of companies in the crypto sector through the first two quarters of the year stood at 39—a pace that would easily beat last year’s 66.” Half those deals this year involved venture-backed companies, compared to 22 deals for VC-backed startups for all of last year. So it’s happening. 

A cycle like this, quite typical in tech cycles, often pulls out the weeds and leaves a sector leaner and stronger for future growth. Much of this will happen in anticipation of an effective regulatory system, which is not far off for the crypto-world. So hold on to your hat.

So is a Crypto Spring coming? My crypto wallet hopes so.