SpaceX’s $75 Billion IPO Looms Over Bitcoin— Is A Liquidity Drain Coming?

Bitcoin (BTC) and the wider cryptocurrency market could face additional selling pressure this week as Elon Musk’s SpaceX gears up 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 Reuters, the rocket maker has reserved as much as 30% of the initial public offering, or $22.5 billion worth of shares, specifically for retail investors. 

Analysts and crypto executives cited in the report said this setup can encourage a shift in how investors manage their cash, effectively rotating 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 got to come from somewhere.” 

He argued that an IPO tied to “one of the biggest names in tech” would be likely to pull capital out of crypto, at least at the start, because both markets compete for the same kind 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 with Bitcoin and crypto, and that investor attention is leaning toward AI-related opportunities rather than crypto.

Market analysts also highlighted that Bitcoin itself has lost some of its appeal for investors, which may 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 is not helping. 

IPO Pipeline And Rate-Fear Cloud Bitcoin Outlook

According to Sui Chung, CEO of CF Benchmarks, which provides the index for several crypto exchange-traded funds (ETFs), outflows from these funds surged to more than $2 billion in May. 

This has already taken its toll on Bitcoin and the wider crypto market, with BTC currently trading at around $62,136 — about 50% below its all-time high of $126,000, according to CoinGecko data.

Chung said the money leaving crypto is likely going toward equities, though he cautioned that it cannot be assumed it will flow directly into SpaceX. Still, he indicated that at least some of the capital is being redirected into the broader equity market.

With additional high-profile IPOs expected later and more cautious expectations building around interest rates, the report argues that crypto may struggle to recover quickly. Hallarn suggested it is difficult to see meaningful tailwinds soon, adding that the environment does not look particularly supportive. 

Featured image created with OpenArt; chart from TradingView.com