Whether or not you think crypto is a pivotal technology or generational scam, there’s no arguing that there’s money to be made off of it. But despite the improbable returns and all-time highs in leading digital assets like Bitcoin and Ethereum, there might arguably be even better money for investors buying companies selling access to the boom.
See, there’s an old adage about selling pickaxes to gold miners. And arguably, nobody’s done it better than Robinhood (HOOD) and Coinbase (COIN) . The two industry leaders spent years in the dumps after their respective 2021 IPOs, but with the years-long recession of trading speculation in the rear view, the two companies have soared. They’re up 475% and 62% over the last year.
Their performances have created a lot of FOMO among crypto and fintech operators. And thanks to a slew of new pro-crypto policies from the Republican-run U.S. government, and record valuations in digital asset land, there’s a new boom of firms seeking out Wall Street. It’s already created some of the year’s most fantastical rallies.
Take USDC creator Circle Technology (CRCL) for example, it’s up over 400% since its IPO. It’s not a one-off thing, either: crypto exchange and media firm Bullish BLSH, which IPOed this past week, proved the demand for crypto IPOs is durable; it’s nearly doubled from its IPO price.
So who should be on your radar next? Here are three to watch out for:
Grayscale
If not for Grayscale, the largest digital asset manager, we might have been waiting years for Bitcoin and Ethereum ETFs to become reality. The company was a first-mover in bringing crypto to Wall Street through its Grayscale Bitcoin Trust and Grayscale Ethereum Trust.
The funds, plus dozens of other products offered by the asset manager, offered spot exposure to the digital assets long before major asset managers paid any mind to the crypto industry.
Next on its list, it plans to take itself to Wall Street, capitalizing on the robust drip of management fees from its various crypto products. It manages over $33 billion in assets. In mid-July, it was reported that the firm had confidentially filed for an IPO.
Gemini
They might not have invented Facebook, but settlement money in hand, the Winklevoss twins have managed to build a billion-dollar business in the burgeoning crypto business.
After buying millions in Bitcoin and attempting to bring a ‘Winklevoss Bitcoin Fund’ to Wall Street over a decade ago, the twins settled for building their own crypto exchange.
Today, Gemini has grown to be one of the larger centralized exchanges. As a result, it’s seeking to strike while crypto demand is strong. In fact, it was one of the first firms to throw its hat in the ring, in light of the strong performance seen by Circle.
Last it raised money from venture capital investors in Nov. 2021, crypto was at all-time highs. Filing confidentially for an IPO, the company would likely seek a valuation around the $7.1 billion it fetched back then.
BitGo
Crypto custodian BitGo has also joined the chorus of crypto firms seeking a home on Wall Street. It might score big, given the fact that it’s already a massive home for crypto assets.
BitGo custodies over $100 billion in assets now, making it one of the largest holders of crypto. It provides services directly to exchanges, asset managers, and other businesses. Not just holding and securing coins, but staking them and providing trading, lending, and borrowing services as a prime broker.
It’s fair to assume that the firm’s near-doubling in assets over the last year is an indication it’s ready for prime time, but outside of the $1.75 billion valuation it fetched in Aug. 2023, we won’t know a whole lot more until the company’s confidential IPO becomes public.
Are crypto IPOs a safe bet?
It’s hard to call anything a sure thing these days, particularly with U.S. stock benchmarks and crypto markets at record levels.
For those interested in playing the IPOs, there’s likely an opportunity to hop in on the ground floor of the new listings, playing the first-day pop and ensuing optimism. Some brokerages, like Robinhood and SoFi, even allow investors to request shares at the IPO price.
For longer-term holders, closer examination of the companies’ financials will be a must. Most of that information is not public yet, though. To that end, if you’re a crypto believer, a bet on these firms might make sense if they’re financially strong and growing. But given the nature of this fickle market, that means betting that the crypto market’s best days are still ahead.
And that’s by no means a sure thing.
