By Staff Writer
The US is gradually losing its dominant position in terms of crypto fundraising and M&A activity while the price of Bitcoin continues to remain a bellwether for the industry, according to a new report from consultancy PwC.
In the first half of 2019, the United States accounted for 41% of the crypto deals compared to 36% in Europe, Middle East and Africa (EMEA) while Asia accounted for 22% of the total deal flow, the report said.
In addition, the average ticket size of the deals has also increased by nearly 50% from $6mn to $9mn as the industry grows in size and become more attractive to institutional investors, said Lucy Gazmararian, senior manager at PwC, speaking at Coin Desk’s flagship Invest: Asia 2019 blockchain conference in Singapore on Friday (September 12.)
“Institutional investors are becoming interested because if the deal size is too small it is not worth the effort for them,” Gazmararian told the conference.
In terms of deal activity, the mining sector is no longer the most popular, having been replaced by blockchain infrastructure sector, followed by crypto exchanges, trading infrastructures, payments, and wallets in that order, the survey showed.
“The price of Bitcoin continues to remain a bellwether for the industry… (and) it will drive both fundraising and M&A activity in the industry,” he conference heard. For instance, there was a positive correlation between the price of Bitcoin and an increasing trend of reverse mergers as crypto exchanges to takeover listed companies in order to access a bigger funding pool.
There was no reverse mergers in the fourth quarter of 2018 when the price of Bitcoin was at $4000. However, nearly 5% of the total deals are reverse mergers in the first quarter of 2019. This trend is expected to increase further, she said.
As crypto-assets become more mainstream, more M&A deals and reverse mergers are expected to happen, especially in Asia, she added.