The returns from US initial public offerings (IPOs) this quarter have significantly contracted, with the cryptocurrency sector emerging as one of the hardest-hit areas due to the recent market crash. This has raised the bar for companies like Grayscale Investments and BitGo Holdings to go public in the near term.
Excluding special purpose vehicles such as closed-end funds and blank-check companies, US IPOs raising over $50 million this quarter have averaged a 5.3% decline, while the S&P 500 gained 0.9% during the same period. Notably, the five cryptocurrency firms that went public this year have seen an average drop of 31% this quarter.
The crypto market collapse, which began in early October, has wiped out over $1 trillion in total digital asset market value. However, even before the crash, the reception for crypto-related IPOs was mixed. For instance, cryptocurrency exchange Gemini Space Station (GEMI.US), which debuted at $28 per share in September, fell 14% in Q3. EToro Group (ETOR.US) fared worse, dropping over 20% from its May listing through September 30.
Even companies that showed resilience before the downturn were not spared. Bullish (BLSH.US), an institutional crypto exchange led by Tom Farley that went public in August, has plunged 38% since early October. Circle (CRCL.US), a stablecoin issuer that listed in June and was popular among retail investors, saw its shares roughly halve during the same period.
However, Bullish and blockchain-based credit firm Figure Technology Solutions (FIGR.US) still trade above their IPO prices. This performance raises questions about how the market will receive crypto ETF provider Grayscale, which filed for an IPO on November 13, and crypto infrastructure firm BitGo, which submitted its application on September 19.
The challenging environment extends beyond the crypto sector. Josef Schuster, founder of index provider IPOX Schuster, noted, "Given the substantial losses investors have suffered, cryptocurrencies might be the least favored industry." While he doesn't expect companies to delay December listings, they may need to lower pricing expectations.
Investment banks still hope to complete more IPOs during the brief window between Thanksgiving and Christmas, but some firms have already withdrawn. John Foraker, CEO of Once Upon A Farm PBC, decided to postpone the children's food company's IPO to 2026, citing US government shutdowns as a disruption.
The short-term health of the IPO market—including prospects for more crypto-related offerings—may hinge on whether a so-called "Santa Claus rally" materializes. David Erickson, a business professor at Columbia Business School, observed, "If investors are struggling with their existing portfolios, they won't get excited about anything new unless it's truly unique."
Despite current headwinds, all signs point to cryptocurrencies remaining a major IPO theme in 2026. Crypto exchange Kraken recently disclosed it has confidentially filed for an IPO. Kevin Moss, managing director and portfolio manager at Private Shares Fund, which holds stakes in 80 private or recently public growth companies, noted that many firms have been waiting for years to go public. He anticipates a potential "compressed spring" effect next year, with a wave of listings across multiple sectors, barring unforeseen events.