In this photo illustration, an IPO (Initial public offering) words are seen on a smartphone screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
Investors who were already allocating to the crypto market in the previous bull run will vividly remember the stratospheric rise of altcoins during the DeFi summer of 2021. Triple-digit percentage returns were almost the norm, and the total market capitalization of digital assets soared from around $200 billion in January 2020 to just over $3 trillion by November 2021, which ultimately marked the top of the cycle.
Almost four years later, we are back in the latter stages of a bull run – but this time, things are quite different. This time, crypto has grown up. And that’s because crypto is becoming universally accepted as more than just a fringe technology.
With the help of supportive regulations, digital assets like Bitcoin and stablecoins are becoming part of the global financial ecosystem. So much so that traditional banks like Bank of America and Citibank are preparing to launch their own stablecoins, while even retailers like Walmart and Amazon are making a foray into this new and exciting sector.
Nothing exemplifies the shift in attitudes more than Circle’s recent blockbuster Initial Public Offering (IPO), which saw its shares skyrocket by 600% – gains that echoed the 2021 DeFi summer. This was, no doubt, driven by the soaring interest in stablecoins, with Cicle’s USDC . And this, perhaps, gives us a taste of things to come as the bull run nears its crescendo.
A rising tide
Circle is just the first of many leading crypto players that have already disclosed plans to IPO in the coming months. This includes crypto asset managers Gemini and Grayscale, and a growing number of others. Circle’s success will no doubt embolden those who may still be on the fence.
And this is an attractive prospect for investors, especially those new to crypto. Buying a listed company is a far less frightening prospect than diving headlong into a liquidity pool on Curve Finance or trying to figure out which memecoin will 100x from here. Listed stocks can be bought through a traditional brokerage account or platforms like Robinhood, removing the friction of onboarding into the crypto ecosystem. All the benefits of crypto exposure, with far fewer risks.
And, as with any free market, demand can be expected to drive supply here, too. This is great news for projects building in the crypto ecosystem. New listings signal an influx of capital into the digital asset economy, and this capital will undoubtedly trickle down to infrastructure projects, developer tools, Layer 1 and Layer 2 blockchains – all the ingredients of a healthy Web3 landscape.
Not a death knell for altcoins
Critics have voiced concerns that the crypto IPO boom could kill the altseason as we know it, with some suggesting the crypto market will never see anything like 2021 again. And this is true to an extent – the ecosystem is maturing, and expecting 1,000% returns on an altcoin is no longer realistic. But those who believe crypto IPOs will usurp altcoin projects are only seeing half of the picture. These stock market listings are nothing but positive for altcoins, because they signal wide acceptance of cryptocurrencies as a legitimate part of the financial ecosystem.
Listed crypto companies are not the end of crypto as we know it – they’re a gateway into Web3 for millions of new users who have been reticent to dip their toes until now. Investing in Circle or Kraken shares is just what the general public needs to get comfortable enough with crypto to look beyond listed stocks toward the wider altcoin offering.
And the good news is that Web3 builders have been quietly getting ready for this mainstream interest. Decentralized apps have been working on interoperability and user experience; projects have been ramping up their community-building efforts; and a group of leading and lasting brands with proven news cases have been expanding their offering in new sectors like real world assets (RWAs) and AI. As the web2 world increasingly expands into web3, the ecosystem is, without a doubt, maturing.
A new order
Altcoins may no longer be the only game in town, but they still offer something a listed stock never can – decentralization, governance, community. From the beginning, these are some of the main reasons users have flocked to Web3, and they will continue to do so, regardless of how many new listed crypto companies spring up over the next 6-12 months.
That’s not to say that every altcoin will soar the way they did during the last bull run. One thing is clear: investors are becoming more discerning. And with a greater choice of crypto products available – not only through IPOs, but also tokenized equities and various treasury companies – crypto projects will have to work harder to impress token buyers. Those that prioritize their users are best placed to emerge victorious.
But rest assured, the altseason is certainly not cancelled. The crypto ecosystem has matured enough over the last four years to accommodate all the novel investment instruments on a wide variety of different platforms.
This summer, we will see the entire digital asset market reap the benefits of its growing acceptance by mainstream finance. The coming IPO boom is set to kick off a flood of liquidity that builders in the crypto space have been anticipating for years. Crypto is in for a long, exciting summer, so we better get ready.
