Crypto IPOs Struggle as Market Crash Hits Returns

Returns from new U.S. IPOs have declined sharply this quarter, with crypto-focused listings among the biggest casualties. Companies raising more than US$50 million — excluding closed-end funds and blank-check vehicles — fell an average of 5.3%, while the S&P 500 index rose 0.9%.

Among these, the five crypto companies that went public this year lost an average of 31% in the quarter as reported by Bloomberg, highlighting the challenges facing upcoming filings. This raises questions about how Grayscale Investments Inc., the crypto ETF provider that filed for an IPO on November 13, and BitGo Holdings Inc., a crypto infrastructure firm that filed on September 19, will perform in the current environment.

“Crypto will probably be the least favoured sector given investors have suffered a lot of losses,” said Josef Schuster, founder of index provider IPOX Schuster.

Schuster added that companies may still list in December but might need to lower pricing expectations to attract investors.

Mixed Reception for Crypto IPOs

The crypto market crash that began in early October wiped out more than US$1 trillion in digital asset value, further complicating IPO performance. However, even before the downturn, reception for crypto listings had been uneven.

Shares of the Winklevoss twins’ Gemini Space Station Inc. fell 14% from its US$28 IPO price in September through the end of Q3.
The Bullish exchange, led by Tom Farley and listed in August, dropped 38% since early October.
Circle Internet Group Inc., a stablecoin issuer, saw its stock roughly halve since its June IPO.

Meanwhile, Figure Technology Solutions Inc. and some other firms are still trading above their IPO prices, showing pockets of resilience despite the broader crypto slump.

Volatility Boosts Trading Volume Despite Weak IPOs

One positive outcome of crypto market turbulence has been an increase in trading activity. The 14-day average Bitcoin trading volume this month reached its highest level since March, benefiting exchanges and liquidity providers even as IPO performance struggles.

IPO Calendar Faces Year-End Challenges

Investment bankers are hoping to complete more IPOs during the narrow window between Thanksgiving and Christmas, but some companies have already postponed plans.

“We decided to postpone the IPO until 2026, citing the government shutdown as having ‘got in the way,” said John Foraker, CEO of Once Upon A Farm PBC, on LinkedIn.

The combination of market volatility, crypto-specific risks, and macroeconomic factors has made year-end IPOs in both crypto and other sectors more challenging.