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BitGo’s stock keeps falling. The digital asset custody firm dropped nearly 40% since its IPO last year, and now Wall Street thinks someone’s going to buy them out before things get worse.
JP Morgan analysts flagged BitGo as a prime takeover target on February 17, pointing to the company’s solid infrastructure and how it could fit into traditional banking. The firm’s been around since 2013, building secure wallets for crypto assets and landing big institutional clients. But the IPO hasn’t worked out like anyone hoped. Investors got excited at first, then reality hit when profit margins looked thin and competition heated up. Now trading volumes jumped 30% on February 15 as rumors swirl about which bank might make the first move.
The numbers tell the story.
BitGo pulled in $200 million revenue last year, up 15% from 2024. But they also lost $45 million, which has analysts wondering if they can make it alone in this market. CEO Mike Belshe keeps saying they’re focused on innovation and staying ahead in digital security. “We are committed to driving innovation and maintaining our leadership in digital asset security,” Belshe said recently. That’s pretty much what every CEO says when their stock’s tanking.
Goldman Sachs jumped in on February 16 with their own take. They think BitGo’s multi-signature tech could be exactly what banks need to beef up their digital security. And honestly, that makes sense. Banks are scared of getting hacked, especially when they’re dealing with crypto. BitGo’s encryption protocols are solid, according to Morgan Stanley analysts who put out a note February 18.
The company just extended its deal with Coinbase on February 10. They’re working together on better custody services for institutional clients, which could make BitGo look even more attractive to buyers. But there’s competition heating up too. Anchorage Digital grabbed $50 million in funding on February 12, putting more pressure on BitGo to figure out their next move.
Stock closed at $17.50 on February 18. That’s a slight bounce from recent lows, but still way down from where it started. CFO James Lee said on February 16 that they’re looking at new partnerships to expand services. He didn’t say anything about acquisition talks, which probably means they’re happening behind closed doors. See also: Mizuho Backs Bitgo with Outperform Rating.
Banks want in on crypto, that’s clear. Buying BitGo would give them instant access to the infrastructure and client base they need. The regulatory stuff’s messy though. Any deal would have to get through a bunch of approvals, and crypto regulations keep changing. That could kill a deal before it even gets started.
BitGo’s trying to expand into Europe and Asia, which might make them worth more to potential buyers. International reach matters when you’re talking about digital assets. The company’s partnerships with major exchanges give them a solid foundation, but they need to start making money soon or someone’s going to scoop them up cheap.
No formal offers are public yet. BitGo isn’t talking about who might be interested or what kind of price they’d consider. The silence is probably strategic – they don’t want to look desperate even though their stock performance suggests they kind of are.
Trading activity stays high as investors bet on a takeover. Some think it’s inevitable given BitGo’s financial situation and the interest from traditional banks. Others worry about regulatory hurdles and whether any deal would actually get approved. The crypto market’s volatility doesn’t help either – buyers might wait for more stability before making big moves. More on this topic: Senator Moreno Pushes April Deadline for.
Anchorage’s funding round shows there’s still investor appetite for custody services. But it also means BitGo faces stronger competition just when they need to prove their value. The company’s technology platform is solid, but execution and profitability matter more now.
February’s been busy for BitGo watchers. Between analyst reports and partnership announcements, something’s clearly building toward a decision point. Whether that’s an acquisition, more funding, or just continued struggles as an independent company remains unclear. The stock’s performance over the next few weeks will probably tell us which way things are heading.
The custody sector’s consolidation wave makes BitGo’s situation even more precarious. Fireblocks raised $550 million in Series E funding last September, while Hex Trust got acquired by Ripple for an undisclosed amount in January. Industry data shows custody providers need at least $500 million in assets under management to achieve sustainable profit margins – BitGo currently manages around $300 million. Smaller players are getting squeezed out as institutional clients demand more comprehensive services and regulatory compliance becomes increasingly expensive.
Traditional banks have been quietly building their crypto capabilities for months. Bank of America filed three blockchain-related patents in January, while Wells Fargo expanded its digital asset research team by 40% since December. These moves signal serious intent beyond just custody services. BitGo’s existing relationships with over 1,200 institutional clients could save acquiring banks years of relationship-building. The Federal Reserve’s recent guidance on crypto custody services, released February 8, actually makes acquisitions more attractive by providing clearer regulatory pathways for banks entering the space.
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