The crypto industry is facing a significant shift, according to Bullish CEO Tom Farley. He suggests that many companies will soon realize that they don't actually have viable businesses but merely products. This revelation could mark the beginning of a wave of consolidation within the sector, as larger firms look to acquire smaller projects.

Farley, who previously served as president of the New York Stock Exchange, shared his insights during a recent CNBC interview. He pointed out that the ongoing decline in the crypto market, with Bitcoin down nearly 45% from its all-time high in October, is a crucial catalyst for this consolidation.

At the time of publication, Bitcoin was trading at $69,405, a stark contrast to its peak of $126,100. Farley believes that this drop will force companies to reevaluate their positions. He emphasized that the consolidation trend should have begun much earlier but was delayed due to inflated valuations that fostered unrealistic expectations.

Many companies were holding onto the hope of recapturing 2020 valuations, even when their growth was stagnant. Farley recounted conversations he had with firms seeking exorbitant valuations despite having minimal revenue growth. He believes this 'dream' is now over, and companies must adapt or face extinction.

The prospect of consolidation in the crypto industry raises both opportunities and challenges. On one hand, underperforming projects could be absorbed by larger companies, streamlining the market. On the other hand, this process could result in layoffs and internal disruptions as companies merge or shut down.

Farley’s comments resonate with the current climate in the venture capital space. Eva Oberholzer, chief investment officer at Ajna Capital, noted that VC firms have become increasingly selective about the crypto projects they back. She indicated that the industry has matured to a point where it mirrors the cycles seen in other technologies.

As the crypto landscape evolves, it will be interesting to watch how these trends unfold. Will smaller projects find safe havens in larger companies, or will they struggle to survive? Only time will tell, but one thing is clear: the industry is on the brink of a significant transformation.