ARK Invest research director Lorenzo Valente has warned that crypto is entering the most severe consolidation phase in its history, as revenue concentrates among a small group of platforms and weaker businesses buckle under falling trading activity.
In a post on X, Valente said the industry’s market structure had shifted decisively, with investors becoming more selective as falling revenues intensify pressure on crypto teams and exchanges, pushing more of them toward shutdowns, bankruptcy filings, acquisitions and distressed sales.
Crypto revenue concentrates among fewer platforms
Valente argued that revenue concentration has reached record levels across several parts of the crypto economy, including applications, middleware and layer-one networks.
Valente’s accompanying chart showed Hyperliquid and Pump.fun capturing roughly two-thirds of application revenue, with Ethena lifting the three platforms’ combined share to nearly 80%.
The concentration shows that revenue is increasingly flowing toward a small group of platforms with clearly defined, fee-generating business models. As those leaders capture a larger share of industry income, competing projects face mounting pressure to sustain operations and secure fresh capital.
Valente expects the trend to accelerate in the coming months, potentially triggering more mergers and acquisitions, Chapter 11 filings, shutdowns and “acqui-hires,” where companies are purchased primarily for their employees rather than their products.
While the contraction could eliminate weaker businesses, the post described the shift as extremely bullish for the broader industry, arguing that consolidation may leave behind a smaller but more durable group of companies.
Falling volumes deepen losses as exchanges shut down
Recent financial results and closure announcements appear to reinforce that warning.
Robinhood’s cryptocurrency transaction revenue dropped 38% year over year to $100 million in the second quarter of 2026, even as stronger equities, options and prediction-market activity pushed the brokerage’s overall revenue to a record.
Crypto trading volume on Robinhood’s app fell 35% to $18 billion. Total volume reached $40 billion after including $22 billion processed through Bitstamp, while digital assets represented about 13% of transaction-based revenue.
The slowdown was also visible at eToro, where crypto trades declined 32% in April and 31% in May from a year earlier. Average investment per trade fell 22% and 28%, respectively.
The pressure is now extending beyond weaker trading results, with BitMart Exchange announcing plans to wind down operations after reviewing market conditions and its strategic direction, ahead of a full closure on Jan. 31, 2027.
BitMEX also announced that its exchange would close on Sept 23, 2026, following a strategic review of the business and the wider industry.
Together, the revenue declines and exchange closures point to a market in which scale and reliable income are becoming increasingly important as trading activity weakens.
Tariffs and conflict deepen crypto’s downturn
Crypto’s downturn and consolidation have deepened as tariff tensions and global conflict push investors away from speculative assets.
The downturn intensified in October 2025 after U.S. President Donald Trump announced an additional 100% tariff on Chinese imports, triggering panic selling and more than $19 billion in leveraged crypto liquidations.
Since then, geopolitical uncertainty has fueled sharp market swings, periodically lifting oil on supply concerns and driving investors toward defensive positions, although gold has not consistently behaved as a haven.
With crypto’s market value falling from an October peak of $4.4 trillion to about $2.6 trillion by April, weaker trading activity has squeezed fee income and accelerated consolidation, sales and closures.
