Did Circle’s IPO kick off a ‘crypto’ IPO boom?

On June 5, Circle (NASDAQ: CRCL), the company behind the USDC stablecoin, went public on the New York Stock Exchange (NYSE). Priced at $31 per share, Circle’s IPO was an overwhelming success. By the end of its first day, shares closed at $82.84, a 167% gain.

The demand didn’t stop there. On its second day, Circle’s stock (CRCL) climbed as high as $118.21. By day three (June 9), it reached an all-time high of $120.96 before starting to cool off; in just its first three days, Circle shares were up roughly 256.44%.

It’s clear that public markets have a newfound interest in cryptocurrency companies, and the crypto industry has taken note of this. With Circle’s debut opening the floodgates, many crypto companies seem to be gearing up for IPOs of their own now, riding what could be a wave of IPOs in the cryptocurrency industry that has been kicked off by Circle.

Why are crypto companies filing for IPO now?

If not now, then when?

When most people start businesses, they dream of reaching a point where the company either generates enough revenue to maintain a sustainable business with respectable salaries, or they imagine a liquidity event like an acquisition or a public listing that turns their equity in the company into tangible money.

Neither path is easy. For a company to successfully go public, the right market conditions and industry tailwinds need to line up. When it comes to crypto, we have reached a point where that perfect set of conditions seems to be in place.

The biggest, arguably most important, factor for the cryptocurrency industry that has given the companies that operate within it a path to liquidity is regulatory clarity.

The promise of clear regulation began on Donald Trump’s campaign trail and was later implemented once he entered the White House. Trump has been a crypto-friendly president, not just in words, but in action. This administration has set a new tone for the industry, from launching his own crypto ventures to signing executive orders and driving policy changes across key agencies like the Securities and Exchange Commission (SEC).

A few examples of significant changes include the SEC winding down several long-standing crypto investigations and formally announcing that memecoins are not securities, as well as the stablecoin bill (GENIUS ACT) that is working its way through the White House but provides clearer guidance for stablecoin issuers.

These factors have created the perfect storm for cryptocurrency companies, giving them the credibility, regulatory clarity, and attention they need to go to the next level, which, for some, is the public markets.

Crypto companies preparing to go public

Looking to ride the momentum created by Circle’s IPO success, other crypto companies have begun preparing for IPOs of their own. Gemini, the cryptocurrency exchange founded by the Winklevoss twins, has confidentially filed its S-1 registration, signaling its intention to go public. Even before Circle’s IPO hit the market, the Trump family’s American Bitcoin mining company announced its plans to go public, a clear signal that market participants are responding to the shift in sentiment around crypto IPOs.

Although these are the companies who have made announcements regarding their intention to IPO, you can expect more to follow. Many crypto companies that have been in business for several years and have reached a certain level of maturity are probably looking hard at whether this is the right time for them to go public.

Circle opened the IPO window, and now, with the current market conditions surrounding crypto, including clear regulations, a supportive administration in the government, and rising institutional interest, it has become an optimal time for crypto companies to debut in public markets.

Will crypto IPO stocks hold their value over time

To be fair, it probably won’t be smooth sailing for every company that takes this path. Yes, the IPOs will probably happen. The companies ready for it won’t have a problem finding an underwriter and going public. And yes, there will probably be strong initial demand for shares. But the bigger question is: will these stocks hold their value over time?

This moment feels a bit reminiscent of Coinbase’s (NASDAQ: COIN) public debut. The company had a good opening day when it IPO’d, but afterward, the $COIN share price fell for several months, and now, four years later, it still hasn’t reclaimed its initial highs.

Or worse, this new wave of crypto IPOs could be reminiscent of the SPAC era. In 2021, a wave of companies went public through reverse mergers with shell companies, but many newly minted public companies have since floundered.

In other words, this could be the beginning of the end; all of the IPOs beginning to take place could be a top signal, the notion that crypto is approaching a peak that will be followed by an economic descent. Circle has been trading for less than a week, and shares are already down roughly 12%, potentially confirming that the IPO event is “the top” for many of these companies looking to go public.

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