Crypto Holding Even As Equities Markets Tumble

This is a new weekly feature that will look back at the week that was in crypto, blockchain and Web3 and offer insights and analysis. To see more of our Web3 coverage, visit Crunchbase’s Web3 Tracker—a new site looking at startups, investors and funding news concerning all aspects of Web3.

Welcome to the first Web3 Weekly column that highlights news and coverage of the Web3 space here at Crunchbase News.

This week we took a deeper look into M&A dealmaking—or lack thereof—this year in crypto. While the year got off to a fast start, with more than a dozen deals announced for VC-backed companies, the pace has slowed as the crypto winter has gotten colder.

Just this month, Bolt dropped plans to buy crypto and payment infrastructure company Wyre for $1.5 billion as the industry pilots through dropping valuations. Weeks earlier, digital asset investment firm Galaxy Digital called off its proposed $1.2 billion acquisition of Palo Alto, California-based BitGo.

Despite the pullback on dealmaking, other numbers this week may show some positive sign for the industry.

Crypto vs. public markets

Crypto prices historically have been linked to the public markets (here’s an example), often mirroring to some degree the ups and downs. 

That has been for a couple of reasons—as we’ve written about before—including the influx of large institutional traders from banks to hedge funds into the crypto sector and drops in the market make risk assets like crypto less attractive to investors.

However, something different may be going on right now. The last week has watched both the Nasdaq Composite and S&P 500 drop around 6% as inflation, interest rates and international financial concerns have recently roiled the market.

One would assume we’d see a similar drop in the prices of various cryptocurrencies too, but instead Bitcoin, Ether and other crypto have held relatively even during that time—although Tuesday provided some bumpy times.

That is especially noteworthy for Ether, given it has had a rough month—down more than 10% in the 30 days. Many thought Ether would see an uptick after Ethereum’s much-talked-about Merge was completed just weeks ago. (You can read all about it here, if you missed it.)

However, it seems like investors baked a successful Merge into the pricing weeks earlier, so the cryptocurrency mainly has stumbled since then.

The ability of many crypto assets to hold relatively steady despite a down public market and rising interest rates may indicate investors in the industry are now more long-term holders, as mentioned here. 

Or it could also mean crypto finally reached the bottom that everyone was guessing about for months. 

If either of those reasons are true, it would bring less volatility to a market in desperate need of finding equilibrium.

Only time will tell if it has found it.

Further reading:

FTX Buys Assets of Bankrupt Voyager; Celsius’ CEO Leaves

Crypto M&A Slows As Its Own Type Of Winter Sets In

Illustration: Dom Guzman