Giant IPO tests Bitcoin liquidity, AI stocks steal the spotlight

Bitcoin is feeling the heat as investors reallocate billions of dollars in anticipation of several big IPOs expected to hit the public markets this year. In late June, Bitcoin fell below $60,000 for the first time since September 2024, down more than 50 percent from last year\'s high of about $126,000.

Analysts expect the adjustment to last longer. Citigroup lowered its 12-month target price for Bitcoin to $82,000 from $112,000, citing weak investor demand, outflows of ETF funds and rotation of funds into AI-related assets.

Citi said: \"ETF funds flow, an important driver of prices, has recently turned negative.\"

Bitcoin has been hit as AI-related super IPOs steal market attention.

Bitcoin\'s weakness coincides with strong investor demand for the largest initial public offerings (IPOs) in stock market history.

SpaceX\'s launch is the weathervane. Elon Musk\'s Rocket and Satellite Company went public in June, setting a record for the largest IPO in history, raising $75 billion and valuing it at $1.77 trillion. OpenAI and Anthropic have also secretly submitted draft S-1 registration statements, and if market conditions are favorable, both companies can choose to go public.

According to Sebastian Mallabi, a senior fellow at the Council on Foreign Relations, the combined listings of the three companies could absorb as much as $200 billion in new funding. D.A. Davidson analyst Jill Luria said: \"The joint demand for capital from SpaceX, OpenAI and Anthropic will be so huge that it is likely to impact capital markets.\"

Anticipated technology super IPOs, including OpenAI, are diverting attention-and capital-from cryptocurrencies.

Huge pumping effect

For Bitcoin, the problem is simple: Super IPOs require cash, and Bitcoin provides a deep pool of liquidity. Traders can sell Bitcoin to buy SpaceX exposure, and funds can withdraw from Bitcoin ETFs and invest in hotter public market growth stories.

Crucially, this year\'s tech super-IPO is aimed directly at retail investors. This puts them in direct competition with the sources of venture capital that drove the rise of cryptocurrencies last year. According to media reports, SpaceX reserved 30% of its IPO stake, or $22.5 billion, to retail investors. OpenAI is also planning a large-scale retail placement, and analysts expect Anthropic may adopt a similar strategy.

Spencer Halahn, global head of over-the-counter trading at GSR, said: \"Cryptocurrencies are the financing currency for many of these funds. Money has to come from somewhere.\"

Investors may dump their cryptocurrency positions and turn to AI-related stocks.

Bad timing for Bitcoin

Pressure is coming at Bitcoin\'s fragile moment. Spot Bitcoin ETFs, which had driven previous bull markets, have changed from a source of demand to a source of pressure. According to data, the Bitcoin ETF recorded its worst monthly performance in history in June, with capital outflows exceeding US$4.5 billion.

Citi said that ETF capital flows remain one of the most important drivers of Bitcoin prices. The bank lowered its 12-month net ETF inflow forecast to zero from $10 billion. This may mean that there is still room for further downside in Bitcoin. In strong markets, super IPOs can stimulate investors \'risk appetite; in weak markets, they dominate the market\'s limited attention and liquidity.

Cryptocurrency critic Peter Schiff said that if traders fail to hold on to the $50,000 support level, Bitcoin could fall to $20,000. \"The Bitcoin market is too complacent and far from reaching the bottom,\" Schiff said in a tweet on June 3.

Analysts worry that this year\'s IPO season may mean further decline in Bitcoin.

Wealth effect

However, there is still reason for optimism. Even if these IPOs collectively raised about US$200 billion, they are far below Bitcoin\'s market value of more than US$1 trillion. In addition, most of the money does not need to come from Bitcoin; institutions are more likely to use cash, money-market funds and other stock positions.

Fundstrat co-founder Tom Lee believes the market can absorb upcoming IPO supply without triggering a massive sell-off. He said that after years of chasing high returns from alternative assets, many institutions still have low allocations to public stocks.

SpaceX\'s deal also complicates bearish rhetoric. The stock opened at $150 on June 12, up about 10% from its $135 IPO price, but has since recorded only modest gains. Recent trading prices are approximately US$158. At the same time, Bitcoin remained near $60,000, easing concerns about a major sell-off.

In addition, a successful IPO cycle could eventually trigger a broader rally. Proceeds from SpaceX, OpenAI or Anthropic could flow into riskier assets, including cryptocurrencies. The added liquidity wealth of early investors and employees may exacerbate this effect. Reports say SpaceX\'s IPO is expected to create approximately 4400 new millionaires, including 400 multimillionaires.

Matthew Fleissig, CEO of investment consulting firm Pathstone, said: \"This could become the largest single wealth event in world history.\"

Over time, these once-worrying IPOs could become a tailwind for Bitcoin.

Strong IPO earnings could eventually benefit other risky assets, including Bitcoin.

Ride the wind and waves

Short-term risks are obvious. SpaceX, OpenAI and Anthropic provide investors with a new way to buy high-growth stories as cryptocurrency momentum wanes. The long-term outlook is less certain. JPMorgan strategists see the IPO boom as a double financial and psychological test for the market.

They wrote: \"Mass offerings are both a financial and a psychological event. Active IPO periods are often associated with increased optimism, increased risk appetite and increased confidence in growth opportunities.\"

With two super IPOs still in the pipeline, the question remains: Will Bitcoin ride the wind and waves or be crushed by the wave?