Are retail traders selling their bitcoin to buy the SpaceX IPO?
"Retail investors flock to SpaceX IPO, sparking bitcoin sell-off. Is crypto funding the frenzy?"
SpaceX prices its IPO on June 11. Elon Musk's company is selling up to 30% of its record $75 billion offering to retail investors through Robinhood, Fidelity, and Charles Schwab. This massive offering has sparked speculation that retail traders are selling their bitcoin to buy into the highly anticipated IPO. The roadshow opened on Thursday, already oversubscribed, with more orders than shares on offer, according to Bloomberg.
The timing of the IPO and the recent decline in bitcoin's value have led to speculation about a possible connection between the two events. Bitcoin fell roughly 16% over the same timespan, briefly trading below $60,000 before recovering to around $61,000, according to CoinDesk data. However, stablecoins, which are often used to track money leaving crypto for dollars, do not show any anomalies. Outflows for USDC and tether stayed within the range they've held since February, according to CryptoQuant data.
On-chain data does show heavy withdrawals of bitcoin and ether on Friday, with 66,470 bitcoin and about 2.49 million ether moving off exchanges, among the biggest single-day totals of the year. However, this data has a blind spot, as it cannot see inside a Robinhood or Coinbase account, where someone can sell bitcoin for dollars without either ever touching a public blockchain. Whether crypto holders funded their allocations won't be answerable until the brokerages publish their own numbers.
The largest single days of outflows in recent months were $2.5 billion in USDC on May 22 and $3.6 billion in tether on May 20, both of which came before the sell-off. These outflows do not seem to be directly related to the SpaceX IPO, as they occurred before the roadshow opened. The week's largest flows look like withdrawal and dip-buying, not a scramble for cash.
One place where money clearly drained from crypto was the funds. Spot bitcoin ETFs, the exchange-traded products that hold bitcoin directly, bled for 13 straight sessions through June 3, a record stretch worth about $4.4 billion before a small $3 million inflow snapped the streak. Ether ETFs ran a longer 17-session streak that broke the same day. When investors pull money from these funds, the issuer sells the underlying coins, so the redemptions are real selling.
The SpaceX IPO is a highly anticipated event, with the company offering shares at a $1.8 trillion valuation. The fact that up to 30% of the offering is being sold directly to retail investors is unusual, as typically, a much smaller percentage is set aside for individuals. This has led to a frenzy of interest, with the roadshow already oversubscribed.
The implications of this IPO are significant, not just for SpaceX but also for the broader market. The fact that retail investors are flocking to the IPO, potentially at the expense of crypto, highlights the ongoing shift in investor sentiment. As the IPO market continues to evolve, it will be interesting to see how this affects the crypto market and vice versa.
In conclusion, while there is speculation that retail traders are selling their bitcoin to buy into the SpaceX IPO, the data does not yet support this claim. The on-chain data shows heavy withdrawals of bitcoin and ether, but this could be due to a variety of factors, including dip-buying. The funds, on the other hand, do show a clear outflow of money from crypto, but this is not necessarily related to the SpaceX IPO. As the IPO prices on June 11 and lists on the Nasdaq under the ticker SPCX the next day, it will be interesting to see how the market reacts and whether the speculation about crypto funding the frenzy is proven correct.
