The cryptocurrency markets are currently enjoying a wave of green as Bitcoin climbs toward a new all-time high. The altcoin markets are also heating up, with double-digit daily gains becoming a common occurrence. If you’re currently glued to your screen checking cryptocurrency prices every few minutes, we can’t blame you.
Even though the cryptocurrency markets have really accelerated towards the end of 2020, the cryptocurrency and blockchain industry has been very eventful throughout the entirety of the year. Let’s take a look at some of the main trends we’ve been seeing in the crypto and blockchain space this year, and how they show that blockchain companies are growing in a big way.
Institutional players make their entrance into crypto
In the future, 2020 will likely be remembered in the crypto community as the year when institutional players truly made their entrance into the cryptocurrency market.
This is best evidenced by Grayscale, a company that provides institutional-grade cryptocurrency investment products for a variety of crypto assets. Grayscale has been smashing its own records in 2020, recording record inflows in three consecutive quarters. According to Grayscale, the majority of investments into its products is coming from institutional investors, with hedge funds being the most active players.
In Q1 of 2020, a total of $503 million flowed into Grayscal’s crypto investment products. This figure grew to $905 million in Q2, and increased further to $1.05 billion in Q3.
In another sign that big players are becoming comfortable with crypto, we’ve seen publicly-traded companies like MicroStrategy and Square making multi-million investments in Bitcoin.
Image source: Coin Metrics
Mergers and acquisitions activity is picking up in the crypto industry
This year, we saw one of the biggest acquisitions in the history of the crypto industry when Binance acquired cryptocurrency listings platform CoinMarketCap in a deal reportedly worth $400 million.
Another major deal that happened this year was FTX’s acquisition of crypto portfolio app Blockfolio for $150 million.
These large acquisitions show that major cryptocurrency and blockchain companies are both willing and able to spend big in order to strengthen their position in the market.
According to professional services firm PwC, crypto M&A activity in the first half of 2020 alone surpassed the entirety of 2019. As the cryptocurrency space grows further, we can expect further consolidation and more M&A activity.
Image source: PwC, H1 2020 Global Crypto M&A and Fundraising Report
There’s already several crypto unicorns – who will be next?
We’re seeing more and more blockchain companies reaching »unicorn« status, or a valuation of at least $1 billion.
The latest crypto unicorn is Chainalysis, the blockchain analysis company whose products are used by cryptocurrency exchanges as well as government agencies and law enforcement. Chainalysis is about to raise a $100 million Series C round that values the company at $1 billion.
There’s of course also exchanges like Coinbase and Binance. Coinbase was valued at $8 billion in a $300 million funding round. It’s harder to place a firm valuation on Binance, but it’s definitely well north of $1 billion given the company’s dominant position in the cryptocurrency market.
While most cryptocurrency users are familiar with exchanges, there are crypto currencies in almost all sectors of the industry. For example, Bitmain and Canaan are unicorns that are focused on cryptocurrency mining, Ripple is using blockchain technology to increase the efficiency of payments, and Block.one is a company that covers a wide range of blockchain-powered solutions.
In 2021, we are likely to see more blockchain and cryptocurrency companies make the leap from being an ambitious startup to becoming a billion-dollar company.
Cryptocurrency and blockchain companies will be going public
It’s not a matter of if, but when – major blockchain companies will be going public. In early 2020, Ripple CEO Brad Garlinghouse said that we will start seeing IPOs from this sector very soon. Garlinghouse also remarked that an IPO would represent a »natural« evolution for Ripple.
“In the next 12 months, you’ll see IPOs in the crypto/blockchain space. We’re not going to be the first and we’re not going to be the last, but I expect us to be on the leading side… it’s a natural evolution for our company.”
Coinbase, another huge crypto industry player, is also reportedly considering an initial public offering. According to sources that talked to Reuters, Coinbase was eyeing late 2020 or early 2021 as realistic targets for its IPO. While it currently looks like Coinbase will not be IPOing this year, we might be able to buy Coinbase stock sooner than we think.
When crypto and blockchain companies will be traded publicly, the entire industry will enjoy greater legitimacy and increased mainstream appeal.
The bottom line
One would have to get extremely creative to paint a negative narrative for the cryptocurrency and blockchain space as it stands in late 2020. Crypto assets are enjoying a massive bull market, which will inevitably attract new users and investors. The companies involved in this emerging industry, whether by bringing cryptocurrencies closer to users or creating unique solutions with blockchain technology, will ride this positive wave as well.