Crypto Consolidation Accelerates: ARK Invest Warns of Shutdowns and Mergers

ARK Invest's director of digital assets research, Lorenzo Valente, predicts that crypto is entering its deepest consolidation phase. In this period, revenue and investment are flowing towards fewer businesses.

According to Valente, Hyperliquid and Pump.fun account for 67% of application revenue, while adding Ethena lifts the top-three share to almost 80%. He expects more mergers and acquisitions, Chapter 11 filings, shutdowns, and talent-focused acquisitions in the coming months.

A recent report by ARK Invest shows that application revenue is concentrating, with a record level of concentration across applications, middleware, and Layer 1 networks. The data also reveals that Hyperliquid generated $145 million, Pump.fun produced $123 million, and Axiom earned $58 million in the quarter.

Recent bankruptcies and closures support Valente's warning, including Storj Labs filing for Chapter 11 proceedings and BitMEX shutting down its exchange. The consolidation cycle is also evident through acquisitions, with Kraken's parent company Payward acquiring Magic Labs' wallet-as-a-service business.