Cryptoholding even when stock markets fall

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 startup, investor and funding news on all aspects of Web3.

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

This week we have taken a closer look M&A deals – 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 grown colder.

This month only, Bolt dropped plans to buy crypto and payment infrastructure company Wyre to 1.5 billion dollars which the industry is piloting through dropping valuations. Weeks earlier, digital asset investment firm Galaxy Digital canceled the proposed $1.2 billion acquisition from Palo Alto, California-based BitGo.

Despite the pullback in deal-making, other numbers this week may show positive signs for the industry.

Crypto vs Public Markets

Crypto prices have historically been linked to the public markets (here is an example), which often mirror the ups and downs to a certain extent.

It has been for a couple of reasons –which we have written about before– including the influx of large institutional traders from banks to hedge funds into the crypto sector and falls in the market make risky assets like crypto less attractive to investors.

However, there may be something else going on right now. The last week has seen both Nasdaq The Composite and S&P 500 are down around 6% as inflation, interest rates and international economic concerns have weighed on the market recently.

One would assume that we would also see a similar drop in the prices of various cryptocurrencies, but instead, Bitcoin, Ether and other cryptos have remained relatively flat during that time – although Tuesday brought some bumpy times.

That’s particularly notable for Ether, as it’s had a rough month – down more than 10% in the 30 days. Many thought Ether would see an upswing after Ethereum’s much talked about Merge was completed just weeks ago. (You can read all about it herein case you missed it.)

However, investors seem to have baked a successful rally into pricing weeks earlier, so the cryptocurrency has mainly stumbled since then.

The ability to many crypto assets to remain relatively stable despite a fall in the public market and rising interest rates may indicate that investors in the industry are now more long-term owners, as mentioned here.

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

If either of these reasons are true, it will add less volatility to a market that is in desperate need of equilibrium.

Only time will tell if it has found it.

Further reading:

FTX buys assets of bankrupt Voyager; Celsius’ CEO is leaving

Crypto M&A is slowing as its own kind of winter sets in

Illustration: Dom Guzman