Bitcoin (BTC) and the broader cryptocurrency market could face additional selling pressure this week as Elon Musk’s SpaceX prepares for a $75 billion initial public offering (IPO), with the event expected to drain some of the liquidity that has supported the market’s leading crypto above $60,000.
Analysts warn crypto could feel the hit
According to According to Reuters, the rocket maker has reserved up to 30% of its IPO, or $22.5 billion in shares, specifically for retail investors.
Analysts and crypto executives cited in the report said this setup may encourage a change in how investors manage their cash flow, effectively diverting funds away from higher-risk assets such as Bitcoin.
Spencer Hallarn, global head of over-the-counter trading at GSR, a crypto trading firm and liquidity provider, put it plainly: “Crypto is a funding currency for a lot of this,” adding that the IPO requires $75 billion that “has to come from somewhere.”
He argued that an IPO linked to “one of the biggest names in technology” would be likely to withdraw capital from cryptoat least initially, because both markets are competing for the same type of speculative spending.
Thomas Puech, CEO of INDIGO, another crypto trading firm, offered a similar view, stating that AI has become the “sexier” trade compared to Bitcoin and crypto, and that investors’ attention is shifting to AI-related opportunities rather than crypto.
Market analysts also pointed out that Bitcoin itself has lost some of its attractiveness for investors, which could compound the effect of the SpaceX story.
David Morrison, senior market analyst at Trade Nation, said in a research note that “Bitcoin has lost its luster and novelty for many investors” and that the hype around SpaceX doesn’t help.
IPO Pipeline and Bitcoin Outlook in Rate Fear Cloud
According to Sui Chung, CEO of CF Benchmarks, which provides the index of several crypto exchange traded funds (ETF), outflows from these funds jumped to more than $2 billion in May.
This has already taken a toll on Bitcoin and the broader crypto market, with BTC currently trading at around $62,136, around 50% below its all-time high of $126,000, according to CoinGecko. data.
Chung said money leaving crypto would likely go to stocks, although he cautioned that it cannot be assumed it will flow directly to SpaceX. He nevertheless indicated that at least part of the capital was being redirected towards the broader equity market.
With more high-profile IPOs expected later and more cautious expectations interest ratethe report claims that the crypto may struggle to recover quickly. Hallarn suggested it would be difficult to see significant favorable winds soon, adding that the environment does not appear particularly favorable.
Featured image created with OpenArt; chart from TradingView.com
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