A year of cryptocurrency acquisitions

Money has a captivating narrative. It reveals its view of the world through its flow in global markets. In a confident market, money acts like a talent scout. It takes risks, trying out various options, from business plans and product prototypes to what may now seem like far-fetched visions of the future. It ultimately expresses its confidence by signing investment checks. However, in turbulent markets, money is more like a cautious auditor, favoring things that have already been validated by the market. Think of companies with healthy cash flow, a large user base, well-established distribution channels, or strong teams. Secondly, there's a third scenario, somewhere in between. In this case, money begins to recycle existing resources and flow between different owners. We see this happening when corporate ownership changes due to mergers, acquisitions, business unit restructuring, and so on. All of these scenarios indicate that money is flowing, but this doesn't create new liquidity. This is why anyone interpreting capital flows and funding figures should treat them with caution. Huge funding rounds may signal new risk-taking, but they could also simply mean a flow of funds between existing businesses. The "2025 Crypto Funding Report" reveals that $50.6 billion was raised through 1,409 funding rounds in 2025, more than 200% higher than the $15.5 billion raised in 2024. This sounds like a feast, but only by analyzing the numbers can the truth be revealed. In today's analysis, I will delve into these figures and explain how last year's funding flows reflect the direction of the cryptocurrency market. Let's get to the point. A significant portion of "funds raised" is not necessarily new capital flowing into the cryptocurrency market. The funding report categorizes total funds raised into: Venture Capital (VC)/Private Equity, Mergers & Acquisitions, and Public Sales/IPOs. Over 40% of the funds raised last year came from M&A, compared to just 9% in 2024. While the total amount raised more than tripled compared to the previous year, 2025 is more of a consolidation year for cryptocurrency. The report interprets these figures as “moderate growth” in venture capital activity and “explosive growth” in M&A activity. However, I believe there is a deeper meaning behind these figures. In relatively new industries like cryptocurrency, consolidation can signify maturity and progress. However, if accompanied by capital outflows from other channels, the situation can be quite different. In 2025, funding didn't simply shift from investing in new projects to acquiring existing ones. While total funding increased by $35 billion year-over-year, M&A and public sales/IPOs contributed $27 billion of that growth. Despite a decline in venture capital activity's share of overall funding, venture capital activity still grew by over 70% year-over-year last year. In 2024, venture capital firms accounted for over 85% of total funding for cryptocurrency projects, but this figure dropped to 46% in 2025. This phenomenon, along with how venture capital firms allocated funds across different stages of cryptocurrency projects last year, has caused concern among emerging cryptocurrency developers and founders. In 2025, venture capital firms wrote far fewer checks than in previous years, but the amounts were larger. These checks were primarily used to fund existing projects that had reached later stages, rather than emerging early-stage projects. Breakdown data shows that pre-seed, seed, and Series A funding rounds declined year-over-year, while Series B and Series C funding more than doubled in 2025. This behavior is reflected even when examining the number of checks signed across all funding stages. The two charts above together tell us: "Yes, capital has increased. But it has increased where uncertainty is lower, and founder pitches are more about 'the future of money' than 'there are proven metrics to invest in.'" According to Equal Ventures' "State of the Venture Economy Report," while this foreshadows fierce competition for early-stage entrepreneurs, it could mark a value investing opportunity for investors looking to fund Series A and B projects. This is because intense competition in the seed and pre-seed funding stages has driven up valuation premiums. Higher valuation premiums may mean paying valuation multiples for growth-stage projects based on their risk profile. This shift prompts rational capital allocators to reallocate funds to lower-risk opportunities, such as Series A and B projects, which require lower valuation premiums than seed, pre-seed, Series C, and Series D and beyond projects. This, along with the surge in M&A activity, indicates that risk appetite is changing at different stages. On the one hand, M&A financing accounts for over 40% of all “financing,” but this differs from new capital injected through venture capital and is not truly “new capital.” On the other hand, later-stage financing is favored because its underwriting risk appears lower, offering greater certainty and potentially higher returns on investment. When capital concentrates in certain specific areas, two things happen. First, the decision-making process becomes more centralized. Founders begin preparing to pitch to a smaller audience that focuses on similar metrics and shares notes. Second, the concept of “quality” becomes more standardized. In the cryptocurrency space, this might mean broad distribution capabilities, sound regulation, enterprise-grade applications, and business models that don't rely on cyclical bull and bear market fluctuations. This is why I'm skeptical of the 2025 cryptocurrency funding report data and consider it entirely bullish. While funding has increased, understanding the drivers behind the surge in M&A is crucial. Despite the relatively new nature of the cryptocurrency market, its technology stack has become crowded, making it difficult to scale distribution. In such times, for existing businesses, acquiring and expanding upon existing successful models is far wiser than persuading users to adopt new ones. The deals we saw last year amply demonstrate this. Let's look at the top three M&A deals listed in the report: Dunamu, DigitalBridge, and Deribit. Their combined value of $17.2 billion represents approximately 81% of the total M&A value reported. Coinbase's acquisition of Deribit wasn't a bet or experiment with innovation, but rather an attempt to leverage Deribit's established virtuous cycle. Deribit offers a highly liquid trading platform with mature customer habits and well-developed options and derivatives products, which, once the market matures, could become an ideal choice for sophisticated traders. Coinbase read the signals and prepared in advance. South Korean internet giant Naver adopted a similar strategy, deciding to acquire Dunamu, the operator of Upbit, South Korea's largest cryptocurrency exchange, in an all-stock transaction valued at $10.3 billion. This deal combines a massive consumer distribution platform (a fintech giant) with a regulated high-frequency financial product (an exchange). What does all this mean for 2026? I expect capital concentration to continue until we find a clear exit path. My only reservation about the consolidation proposed in the report is that maturity does not mean the end of innovation. Too much capital invested in ownership restructuring or doubling down on existing ideas could lead to stagnation and fewer breakthrough innovations. If we don't see successful IPOs and large-liquid listings reopen, we expect late-stage investors to continue acting as strict underwriters, while early-stage founders will face attention scarcity. However, I don't believe the seed round stage in the cryptocurrency space is dead. 2025 provided early-stage entrepreneurs with invaluable experience and clear thinking. By 2026, they need to refine their pitch materials, highlighting market-critical metrics such as how to build distribution channels, how to deliver products quickly while complying with regulations, and why their products can survive without relying on a bull market.