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This analytics overview is devoted to cryptocurrency and blockchain business indicators in 2021:
- Cryptocurrency Exchanges Market Activity
- Venture Financing
- Crypto Unicorns
- M&A deals
In 2021, the cryptocurrency sector hit an all-time record in terms of market activity, venture financing, number of M&A deals, mid to later-stage firms and unicorns.
Cryptocurrency Exchanges – Market Activity
Number of Cryptocurrency Exchanges
As of 31 January 2022, CoinMarketCap tracks 458 cryptocurrency exchanges, where 314 are centralized exchanges (CEXs) and the remaining number is attributed to DEXs, derivative and lending markets. As reported by Chainanalysis, the number of active cryptocurrency exchanges peaked at 845 in August 2020.
Number of Active Cryptocurrency Exchanges by Month, Chainanalysis
The number of DEXs and active OTC desks has grown by more than 150% since 2019, while derivative exchange numbers increased modestly. The amount of centralized exchanges and high-risk exchanges declined after initial uptick. However, the centralized exchanges that continue to grow are offering the widest variety of assets, which keeps them attractive to the most active traders.
Index: Growth in number of active exchanges by business model, Chainanalysis
As The Block Research presents, trading volume in spot centralized cryptocurrency exchanges achieved $14 trillion in 2021, an increase compared to $1.8 trillion of volume traded in 2020. Binance continues to be a dominant figure on the CEX market, achieving 67% share of total trading volume ($9.5 trillion) in 2021.
Cryptocurrency Exchange Volume, The Block Research
As The Block Research published, in 2021 the trading volume of BTC and ETH futures have risen beyond $32 trillion, which is 338% higher compared to 2020. The highest futures trading volume of BTC and ETH, reaching 4$ trillion, is accounted for in May 2021.
Volume of BTC futures
Volume of ETH futures
Earnings of Cryptocurrency Exchanges
High trading volumes and prices allowed crypto exchanges to increase their profit. According to calculations made by The Financial Times, the estimated net profits of Binance and FTX in 2021 are over $1bn and $400m. At the same time, Coinbase, the largest listed digital asset exchange, exceeded market expectations by reporting net income for 9 month ended 30 September 2021 climbed to $2.8bn from $146m in the same period a year earlier.
In 2021 we were able to observe an increase in demand for digital assets from institutions, traditional investment funds and asset managers. For example, public-traded companies MassMutual, MicroStrategy, Galaxy Digital and Tesla added BTC to their asset balances, while asset management companies such as Goldman Sachs, Morgan Stanley and JP Morgan allowed its clients to access BTC funds.
Institutional investors have also penetrated the cryptocurrency industry with a historical amount of venture financing. According to Digital Asset Outlook provided by The Block Research, 1,703 crypto/blockchain deals received around $25.1 billion from venture funding in 2021, which is a 719% increase from total funding in 2020, where the number of deals increased by 126%.
Galaxy Digital reports even higher venture financing volumes obtained by cryptocurrency and blockchain technology businesses, which achieved $32.8 billion in 2021, where 43% of crypto funding went into companies involved in trading, exchange services, investing, and lending of digital assets.
Dynamic of Venture and Private Investments to Crypto Industry, 2015-2021, The Block Research
The maturity of the cryptocurrency market is proved by the number and frequency of mid to large-size deals. The Block Research reports that later-stage deals in 2021 had an average deal size of $176.4 million and a median of $126.5 million. Meanwhile, Series B rounds had an average deal size of $97.4 million and a median of $48 million.
Crypto/ Blockchain Funding Stages, 2021, The Block Research
Crypto/ Blockchain Venture Funding by Size, 2020-2021, The Block Research
The deal breakdowns illustrated above serves as evidence of an increased number of mid and large-size deals in the digital asset / blockchain industry. In 2021 as much as 584 deals were greater than $5M, compared to 135 deals of the same size closed in 2020.
Approximately a half of later stage deals are attributed to Crypto Financial Services and Trading/Brokerage verticals. As Block Research stated, the most significant raise was obtained by the cryptocurrency exchange FTX, which received a $900 million round with the firm valuation of $18 billion.
With incremental quantity of mid and large-size deals, 16 companies in 2021 achieved the $1 billion valuation mark and received unicorn status. Coinbase, FTX and Gemini remained at the top by market capitalization, as reported by CFTE. The Block Research identified that there were 64 unicorn companies in 2021, compared to 11 in 2019.
Largest Сrypto Сompanies by Market Capitalization, CFTE research
Mergers and acquisitions deal quantities have also broken records in 2021, with 201 acquisitions executed compared to last year’s high of 85. Deal volumes reached $6 billion, with a 730% increase on YoY basis, which is almost twice higher than the amount for all previous eight years combined.
The largest deal accounted for is Galaxy Digital, who acquired BitGo for $1.2 billion, allowing the company to compete with huge players like Coinbase.
Crypto/Blockchain M&A transactions and Dollar Volume, The Block Research
The Trading and Brokerage vertical was the third most funded in 2021, where the most significant raise was accomplished by the cryptocurrency exchange FTX. In 2021 we have observed ongoing investment in Africa, Latin America, Southeast Asia, and the Middle East, which will continue to flow into crypto exchanges catering to developing regions primed for growth and expansion.