Summary
- The IPO of SpaceX is intersecting with a tech rally and geopolitical uncertainties, creating challenges for the already declining interest and liquidity in crypto.
- Pre-IPO perpetuals on Hyperliquid have seen $240 million in open interest, competing with Solana despite offering lower leverage at 5x.
- A potential initial surge of 25-30% in SpaceX’s SPCX shares could prompt a rotation of wealth into crypto, although experts caution that the stock's sustained value in subsequent weeks will be crucial.
The upcoming initial public offering (IPO) of Elon Musk's SpaceX this Friday is creating an unexpected intersection with the cryptocurrency market. The company aims to raise $75 billion, which would set a record for the largest IPO in U.S. history, serving as a significant stress test for crypto liquidity.
This overlap is particularly evident on Hyperliquid, where pre-IPO perpetual contracts for SpaceX (SPCX) have generated over $240 million in open interest, along with $220 million in daily trading volume. This positions SPCX as the eighth most traded asset on the platform, surpassing many cryptocurrencies and traditional finance options, even with its 5x leverage compared to Solana's 20x.
SpaceX is set to offer 555 million shares at $135 each, as detailed in an SEC filing, bringing the company's valuation to $1.77 trillion and making it the seventh most valuable company in the U.S., surpassing Tesla. However, the ramifications of this massive IPO on the crypto market are subject to differing opinions among experts.
The Bear Perspective: Potential Liquidity Drain
According to Adam Morgan McCarthy, lead researcher at LO:TECH, a digital asset liquidity firm, the trend of capital rotation has been evident for weeks. McCarthy stated, “Retail and institutional investors have been reallocating funds from risk assets to secure SpaceX allocations, and that pressure won’t vanish as soon as trading begins. The opening will reveal whether this overhang was already factored in or if there's another downturn ahead.”
He pointed out that both crypto and AI are now vying for the same retail investment pool, with SpaceX drawing significantly from this source, particularly following the xAI merger. While crypto ETF outflows have risen recently, he believes ETFs are not the main channel for this capital shift, as most investors will gain exposure to SpaceX through their broader index fund investments shortly after the stock joins the Nasdaq 100.
McCarthy emphasized that the more immediate concern is that SpaceX is detracting liquidity and focus from crypto markets at a time when trading volumes are already dwindling. “This IPO is unlikely to catalyze a Bitcoin recovery,” he remarked. “In fact, it may continue to draw attention away from crypto.”
Illia Otychenko, a lead analyst at CEX.IO, concurs that the prevailing scenario suggests a short-term liquidity drain. He noted that the IPO has sparked exceptional interest—reportedly five times oversubscribed—and has likely absorbed funds that could have been directed towards crypto or other speculative markets.
The Bull Perspective: Potential Wealth Effect Rotation
The optimistic outlook relies on the performance following the IPO's launch. Otychenko noted that the structure of the deal is designed to attract retail investors more aggressively than typical large IPOs, with participation reportedly starting from as low as $2,000 and up to 30% of shares allocated to retail participants.
“Should the stock experience significant gains post-listing—as SPCX currently indicates—some of those profits might eventually flow into crypto,” Otychenko said, adding that this is especially true for retail traders who perceive both crypto and tech growth stocks as part of the same risk-oriented investment landscape.
For this capital rotation to occur, Otychenko suggests a substantial first-day increase, ideally exceeding 25-30%, to create a noticeable wealth effect, along with the stock maintaining its valuation after initial excitement subsides. “The critical indicator won’t be the first day of trading but what unfolds weeks later,” he explained. If investors continue to view SpaceX favorably while Bitcoin ETF outflows stabilize, the likelihood of profits migrating into high-risk assets like crypto could rise.
Future Outlook
Neither analyst believes that SpaceX will solely dictate the trajectory of crypto markets. Otychenko pointed out that Bitcoin is still far more influenced by macroeconomic factors and geopolitical events, noting that AI enthusiasm has already been diverting attention and funds away from crypto, a trend SpaceX may simply amplify.
McCarthy stated more bluntly: the real challenge lies not with a single IPO but with a broader structural transformation, as traders and exchanges shift towards providing continuous access to equities and real-world assets.
For now, all attention is directed towards Friday’s market opening, which will determine whether SpaceX will compete for crypto investments or act as a potential catalyst. Until then, the ongoing exodus from Bitcoin ETFs continues, with its price heavily reliant on geopolitical and macroeconomic conditions, as experts have previously noted to Decrypt.
Bitcoin has increased by nearly 1% in the last 24 hours, remaining within a narrow range of $61,000 to $64,000, according to CoinGecko data.
On the prediction market Myriad, which is owned by Decrypt's parent company Dastan, users are bearish regarding Bitcoin's future, assigning a 71% chance for its next move to drop to $55,000.