More than a billion bet on SpaceX via crypto before its IPO

The most anticipated IPOs often have their first effects well before the opening bell. Concerning SpaceX, investor enthusiasm has not only been confined to traditional markets. Still not listed on the stock exchange, Elon Musk's group has however already hit the crypto ecosystem, where betting markets have been formed on derivative products which are supposed to reproduce what the evolution of its capitalization is. This dynamic, which is already mobilizing considerable amounts, shows the growing place of crypto platforms in the anticipation of major global financial events.

A speculative frenzy of more than a billion dollars

The potential IPO of SpaceX is already creating a flurry of activity in the crypto market. Indeed, SPCX perpetual contracts, derivative products which allow speculation on the valuation of the company before its listing, have experienced very high volumes in recent days. We notice a real “speculative fever around the IPO”a sign of the enthusiasm around Elon Musk's space company. SpaceX shares are still not open to the general public, but some investors are already seeking exposure to them through these synthetic instruments.

This phenomenon shows that crypto platforms are capable of reacting quickly to major financial events. In just a few days, SPCX has become one of the most followed products on the market. Traders do not bet on actual shares, but on a theoretical valuation of the company, hoping to anticipate the dynamics that a future listing on Nasdaq could cause. Here is some data that show the extent of this craze:

• Over $1 Billion in Trading Volume in Last 72 Hours;

• Over $2.6 billion in cumulative volume since May 30;
• Approximately $363 million in open interest, representing positions still open in the market.

These figures demonstrate the importance taken by crypto derivatives markets in anticipating major events in traditional finance. They also reflect the exceptional appeal exercised by SpaceX, whose valuation continues to trigger the interest of investors around the world.

Why are investors turning to these alternative products?

The rise of SPCX contracts can also be explained by the difficulty of directly accessing SpaceX. Indeed, the company is still a private company whose shares are largely inaccessible to the general public. Thus, the IPO is already generating enormous interest and many retail investors will potentially find themselves with a ridiculously low allocation, or even no shares at the official listing. Faced with this constraint, the crypto market offers a positioning solution before the event.

Such a situation shows a change in investor behavior. Some of them now prefer to take advantage of derivative products which remain constantly available on crypto platforms, rather than waiting for the official opening of the markets. The idea is not necessarily to hold SpaceX shares, but to take advantage of a possible valuation movement linked to the enthusiasm around the IPO. This approach is gradually bringing the crypto market closer to the role traditionally assigned to certain financial centers specializing in pre-IPO operations.

The limits of a market that already anticipates Wall Street

Nevertheless, this intense market activity even before the IPO is of concern. SPCX contract prices are based on expectations and not actual stock trading. The valuation integrated by traders could therefore be very different from that which will ultimately be adopted when Elon Musk's space company enters the public markets. One of the main risks of this type of product is this potential disconnect.

Many highly-watched tech IPOs have gotten off to spectacular starts, only to suffer significant corrections during their first year of trading. Today, investors who use SPCX contracts are therefore banking as much on the attractiveness of SpaceX as on their ability to properly anticipate the future reaction of the market.

This sequence is above all an opportunity to see the rapid evolution of the crypto industry. It has long been confined to native assets, but it is now developing tools capable of reproducing or anticipating certain mechanisms of traditional finance. The success of SPCX proves that there is a demand for this type of alternative exposure.

If the experiment is conclusive, other highly rated private companies could in turn be the subject of similar products. The real test, however, will come with a possible SpaceX IPO. Only then will investors be able to judge whether the billions of dollars invested in the crypto market actually corresponded to the value that Wall Street is willing to place on Elon Musk's company.