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After a brisk start to the year, the closing of crypto M&A deals has hit its own kind of “winter.”

Earlier this month, the one-click payment company Lock dropped plans to buy crypto and payments infrastructure company wyre for $1.5 billion. The news came just over three weeks after the digital asset investment firm Digital Galaxy canceled its $1.2 billion acquisition plan from Palo Alto, California BitGo.

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The scrapped deals – with around $2.7 billion combined – help illustrate what appears to be a chilling M&A landscape as the crypto industry tries to find its footing after hitting all-time highs l ‘last year.

The market

According to Crunchbase Data, M&A activity targeting VC-backed crypto startups hit an all-time high in the first quarter of the year when 16 were announced. However, the pace of deals has barely returned, with just seven deals in the past two full quarters.

Although the number of transactions has slowed down, there have not been many large transactions. Silvergate Bankthe purchase of the technology assets of the blockchain-based payment network diem—the stablecoin originally developed by Facebook engineers – at $182 million is the largest deal involving a VC-backed entity for the year.

This should perhaps not come as a surprise given the current market conditions. All of the deals announced in the first quarter came just weeks or months after Bitcoin and many cryptocurrencies hit all-time highs in November, with Bitcoin itself flirting with $68,000.

Since those heady days, Bitcoin has fallen over 70% and has frequently traded below $19,000.

Just as investors have abandoned the cryptocurrency market, some venture capitalists have also slowed down the pace of their investments in the sector. Investment in VC-backed crypto companies slowed down during the first semester and looks unlikely to hit last year’s peak of nearly $19 billion.

M&A deals seem to have followed suit, as companies like Bolt and Galaxy Digital mull over deals the two companies announced in the second quarter to much fanfare before calling them off in the third quarter.

Looking for a deal

That’s not to say that the flow of transactions will continue to be slow or stop completely – in fact, it may resume.

It makes sense that companies that announced deals at the start of the year are pulling out as valuations in the crypto sector have plummeted. These declines in valuations could attract more buyers as companies and individuals seek a bargain.

FTX CEO Sam Bankman Fried showed he was more than willing to seek out possible deals and said in a recent interview with CNBC’s Squawk Box that the exchange giant has at least $1 billion to use for acquisitions and bailouts.

FTX is the favorite to buy assets from the crypto lender digital travel—which filed for bankruptcy in July—CoinDesk reported last week.

The Crypto Exchange Giant Coinbase also announced its intentions in space. During the company’s second quarter earnings call last month, Coinbase’s President and COO Emily Choi said the company will continue to be active in both ventures and mergers and acquisitions, adding that these tools have helped the company access innovation in the crypto ecosystem.

“It’s an area that has helped us access the innovation that’s happening in the crypto ecosystem,” she said. “And the crypto winters that we consider builder markets. It is often the best time for us to be greedy when others are afraid.

To learn more about our Web3 coverage, visit Crunchbase Web3 Tracking—a new site to view startups, investors, and funding news regarding all aspects of Web3, cryptocurrencies, and blockchain.

Drawing: Dom Guzman

Stay up to date with recent funding rounds, acquisitions and more with the Crunchbase Daily.

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