ARK Invest researcher warns of deeper crypto shakeout ahead
Macro & Markets ·
Lorenzo Valente says revenue is concentrating in fewer projects while weaker teams and exchanges exit, a dynamic he expects to accelerate bankruptcies and shutdowns.
ARK Invest researcher Lorenzo Valente said the current crypto downturn is producing a more pronounced consolidation than prior bear markets, according to wublockchain.xyz. Capital allocation is narrowing toward a smaller set of teams as projects and exchanges without product-market fit fail to sustain operations.
The concentration is visible in the numbers. Hyperliquid and PumpFun together account for 67% of total application revenue, and when Ethena is added, the top three projects capture nearly 80% of that revenue, per the report. Valente noted that this revenue skew is not limited to applications but extends across infrastructure and layer-1 networks as well, suggesting the winner-take-most dynamic is structural rather than confined to a single sector.
Valente expects the coming months to bring more mergers and acquisitions, bankruptcy filings, project shutdowns, and talent acquisitions as the industry sheds entities that cannot compete for shrinking revenue pools. The framing points to an accelerating shakeout rather than a stabilizing market, with weaker players absorbed or wound down as stronger ones consolidate share.
A separate account of the same research places this consolidation in a longer historical context, describing the pattern of rising bankruptcies as one historically associated with market cycle bottoms. That framing does not confirm where the current cycle stands, but it links the present concentration trend to prior downturns where similar clearing-out preceded eventual recovery.
What remains unclear is the timeline for the anticipated wave of failures, which specific projects or exchanges beyond the named revenue leaders are most exposed, and whether the concentration trend will ease once weaker competitors exit or continue deepening among the remaining top players. The extent of forthcoming M&A activity and talent acquisitions Valente flagged has not yet been detailed with specific transactions or targets.