Circle acquisition of Poloniex is just the beginning of likely consolidation in crypto

News Monday that digital payments company Circle has bought cryptocurrency exchange Poloniex is stirring speculation of more acquisitions in the young digital currency world.

“I think this is a really good sign for the industry. It shows that a lot of companies are going to start consolidating and that will bring [out] the best talent,” said Erik Voorhees, an early investor in bitcoin who is now CEO of digital asset exchange ShapeShift. “I think you’re going to see a lot of that in 2018. These companies have so much capital at this point.”

Venture capitalists and other early stage investors put $1.06 billion into the crypto-economy in 2017, according to Lex Sokolin, global director of fintech strategy at financial research firm Autonomous Next. For the year so far, such investments stand at $323 million.

Investment in crypto-economy ($ millions)

Source: Autonomous Next

The entire cryptocurrency market capitalization has also grown from around $20 billion at the start of last year to around $500 billion in the last few weeks, according to Bitcoin, the largest cryptocurrency by market cap, is up several hundred percent over the last 12 months and was trading near $10,000 Monday.

“These markets are still in their infancy but they hold enormous promise,” Circle co-founder and CEO Jeremy Allaire told CNBC in a phone interview Monday. “There’s going to be a huge amount of value creation.”

“Maybe the first $1 trillion company in the world will be created in this space,” he said.

Goldman Sachs and China-focused investment firm IDG Capital Partners are investors in Circle, which has raised a total of $136 million and has a valuation of at least $420 million, according to PitchBook.


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