Woofun AI reports that the prolonged decline in Bitcoin prices has triggered a dual dynamic within the digital asset sector: widespread workforce reductions among native crypto firms and a record-breaking surge in mergers and acquisitions driven by traditional financial institutions. In the second quarter of 2026 alone, the total value of M&A deals in the crypto sector reached $7.23 billion, a figure that vastly surpasses the $2.14 billion recorded in the first quarter. When combined, the cumulative investment across these two quarters totaled $9.37 billion. This represents a staggering 26-fold increase in M&A activity compared to the same period last year, demonstrating that capital flow remains robust even as the spot market languishes. The backdrop for this divergence is the drop of Bitcoin to its lowest levels in nearly two years, a condition that has forced leading crypto companies to significantly reduce their headcount while simultaneously creating acquisition opportunities for well-capitalized buyers.

The structural shift in capital allocation reveals that companies are no longer prioritizing large-scale recruitment or reckless expansion. Instead, traditional financial institutions possessing substantial funds, alongside top-tier crypto enterprises, are aggressively acquiring payment systems, compliance licenses, and off-chain infrastructure. These assets typically require several years to build from scratch, making them highly attractive targets for immediate acquisition. Traditional financial institutions have emerged as the primary drivers of this M&A wave, preferring to purchase mature digital asset infrastructure rather than constructing complex compliance systems and technical frameworks internally. Banks, payment service providers, and fintech companies have specifically targeted startups that already possess hosting solutions, established payment channels, and essential compliance qualifications. The gradual implementation of global regulatory policies has served as a major catalyst for this boom. The EU's MiCA regulation has established unified licensing standards, while ongoing legislative efforts regarding stablecoins in the United States have provided large companies with the confidence to commit to long-term investments in the crypto sector.

Specific transactions highlight the strategic intent behind these acquisitions. Mastercard spent $1.8 billion to acquire stablecoin company BVNK, a move that secured stablecoin payment technology and global compliance licenses for the payment giant. Other Wall Street giants have similarly seized opportunities through targeted investments. Intercontinental Exchange has expanded into the prediction market sector through its acquisition of Polymarket, while Castle Securities has invested in brokerage service provider Alpaca.

Furthermore, Standard Chartered's venture capital fund has invested in market maker Keyrock. Asset management firms have also leveraged this trend by executing full acquisitions to meet the evolving needs of institutional clients. Franklin Templeton, which manages a scale of $1.7 trillion, recently established a dedicated digital assets department named Franklin Crypto. This new department was formed through the acquisition of 250 Digital, allowing Franklin Templeton to integrate its research and development team with the crypto actively managed products previously operated under CoinFund. This integration enables the firm to provide crypto asset management services directly to its global clients.

Private capital demonstrates a strong preference for entities capable of integrating blockchain technology with the traditional financial system. Financing data from the first quarter indicates that funds are being concentrated on practical applications of stablecoins, such as foreign exchange conversion, corporate salary payments, and cross-border settlements, rather than speculative native crypto projects. In the current market environment, compliance qualifications have become a critical competitive barrier. Companies holding brokerage licenses, federal bank charters, and registered investment advisory qualifications, such as Alpaca, Anchorage, and Superstate, are in high demand among buyers. While traditional finance engages in large-scale acquisitions, underlying public chains are also becoming active acquirers. Historically, layer one and layer two public chains relied on external developers to build applications; however, fierce competition for users has prompted major chains to directly acquire applications designed for ordinary users. Polygon recently acquired Coinme and Sequence wallets, thereby establishing a complete end-to-end user ecosystem and securing on-chain transaction traffic.

Woofun AI data shows that the intense activity of corporate M&A stands in stark contrast to the shrinking job market in the digital assets industry. Statistics from June 2026 reveal that there are only 2,932 active job openings in the global crypto industry today, a number that pales in comparison to the hiring boom experienced during the bull market from 2021 to early 2022. The wave of layoffs began during the market downturn in 2022 and intensified following the FTX scandal, resulting in a reduction of approximately 40% in the total number of crypto-related jobs in North America and Europe. These employment figures have not yet returned to previous levels. In the first half of 2026, company downsizings continued unabated. Major entities including Gemini, Coinbase, Kraken, Algorand, Crypto.com, and even the Ethereum Foundation recently initiated new rounds of layoffs. Corporate executives stated that these reductions were primarily driven by low token prices and macroeconomic pressures, though the improvement in operational efficiency brought about by AI was also a significant factor. Coinbase explicitly described its organizational restructuring as a transition to an 'AI-native operation model.'

Changes in talent requirements are evident in current job listings, where the proportion of crypto-related positions requiring AI skills has doubled in one year, rising from 23% at the beginning of 2025 to 53% in March 2026. Although overall hiring activities have cooled down, the talent structure of the industry has undergone fundamental changes. Companies are no longer freezing all hiring activities but are focusing their efforts on technical and compliance positions. Technical development positions account for 34% of all hiring needs, while legal and compliance positions account for 10%. Compliance positions at centralized exchanges account for 16% of total hiring needs, a figure more than twice the number of marketing and business development positions. This indicates that companies are prioritizing the retention of personnel responsible for license handling, risk management, and core infrastructure operations, while significantly reducing spending on marketing and community management. The few remaining job opportunities are concentrated in top-tier companies rather than startups. Centralized exchanges account for nearly one-third of all industry job positions. The number of positions in the stablecoin and payment sectors is also considerable, but resources are highly concentrated; just Tether and Ripple alone account for 80% of the hiring needs in these sectors.

The acquisition of data firm Messari by Blockworks perfectly illustrates the current situation where large-scale layoffs and industry consolidation are happening simultaneously. Crypto analysis firm Blockworks acquired Messari for approximately $10 million, a stark contrast to Messari's valuation of $300 million after its first round of financing in 2022. Its current valuation has dropped significantly. Before this sale, Messari had already carried out three rounds of layoffs since 2023. The sharp decline in valuation reflects the harsh reality faced by crypto startups that rely on venture capital, advertising, and subscription revenue to survive. Continuous cash flow shortages and weak revenue growth have forced many small and medium-sized companies to seek M&A opportunities, allowing wealthy buyers to acquire professional talent, exclusive data, and traffic channels at low costs. Industry analysts predict that this financial pressure will soon spread to the crypto asset custody sector. In 2025, the stock prices of many listed crypto custody companies were higher than the total value of the crypto assets they held, enabling them to complete multiple rounds of financing smoothly.

However, as token prices continue to decline and company stock prices weaken, the market caps of many such companies have fallen below the actual value of their crypto assets, making it difficult for them to continue increasing their holdings through secondary offerings.

The research team at Galaxy Digital believes that industry mergers are a viable solution for such companies. High-quality custody companies, represented by Strategy under Michael Saylor, can acquire their competitors at low costs, consolidate their balance sheets, and acquire profitable operating businesses, thereby reducing their reliance on rising token prices. At the same time, as relevant legal frameworks continue to improve, decentralized autonomous organizations (DAOs) are also expected to join the M&A trend. Wyoming, USA, has introduced a legal framework for decentralized non-profit consortia (DUNA), granting DAOs the legal right to hold off-chain assets and intellectual property. Clear governance and ownership rules enable protocol-based custodians to acquire supporting software projects or professional development teams.

However, compared to the current mainstream traditional corporate M&A activities, which focus on compliance, decentralized project acquisitions are still in the experimental stage. Although the scale of crypto M&A transactions approached $10 billion in the first half of 2026, the choice of where capital is invested has become more selective. The prediction market sector is the only area that is not subject to strict screening requirements; various event trading platforms are continuously receiving large amounts of funding in their bid to gain a share of the mainstream market.

It is reported that the federally regulated trading platform Kalshi is in talks about a round of financing, and its post-investment valuation is expected to reach $40 billion, almost twice its previous valuation of $22 billion. Polymarket has also received substantial funding support, and both platforms are competing for leadership in the prediction market sector. Outside of the prediction market, the investment logic in the industry has narrowed significantly. Funds are almost exclusively flowing into companies that can integrate blockchain technology with traditional finance. Tokenization service providers and institutional trading platforms are more likely to receive large amounts of funding. These companies generate stable revenues by providing compliance services to banks, brokers, and asset management firms, and their business models are not affected by fluctuations in the retail crypto market. Superstate recently completed a $82.5 million financing round to expand its blockchain securities issuance business, while Alpaca holds a leading position in the tokenization of U.S. stocks and ETF settlements. The financing trends indicate that investors are no longer investing in conceptual tokenization pilot projects but are instead betting on mature, regulated financial products that have already been implemented. It is worth noting that pure decentralized financial protocols and new types of underlying public chains without any practical applications have completely missed out on this quarter's large-scale financing opportunities. The selection logic of capital allocation closely aligns with the overall M&A trend: market liquidity has not disappeared, but funds are only flowing into startups that possess compliance licenses, institutional channels, and real-world applications in traditional finance. This bear market has effectively eliminated weaker companies in the industry: those with weak business models or lacking compliance qualifications have either merged or reduced their workforce, whereas companies that have built compliant financial infrastructure have reaped the benefits of both M&A and investment financing.