The capital rotation story has been building for weeks, according to Adam Morgan McCarthy, lead researcher at digital asset liquidity firm LO:TECH.
“Retail and institutional money has been moving out of risk assets to secure SpaceX allocation, and that pressure does not disappear the moment trading opens,” McCarthy told Decrypt. “The open is when you find out whether the overhang was already priced in or whether there is another leg down.”
McCarthy noted that crypto and AI are now competing for the same retail capital, and SpaceX is drawing from exactly that pool—particularly since the xAI merger. While crypto ETF outflows have accelerated in recent weeks, he argued that ETFs are unlikely to be the primary transmission channel, since most holders will receive SpaceX exposure through their broad-market index allocations within days of the stock’s expected addition to the Nasdaq 100.
The more direct pressure, he said, is simpler: SpaceX is pulling liquidity and attention away from crypto at a time when volumes were already waning.
“This IPO is unlikely to be the catalyst that turns Bitcoin around,” McCarthy said. “If anything, it is more likely to continue sucking the air out of the room.”
Illia Otychenko, lead analyst at CEX.IO, agreed that the base case appears to be a short-term liquidity drain. The IPO has generated extraordinary demand—reportedly 5x oversubscribed—and has likely absorbed capital that might otherwise have gone into crypto or other speculative markets, he said.
The bull case: A wealth effect rotation“If the stock delivers strong post-listing gains—and SPCX currently suggests so—some of those initial gains could eventually rotate into crypto,” Otychenko told Decrypt, “particularly among retail traders who already view crypto and tech growth stocks as part of the same risk-on universe.”
For that rotation to materialize, the CEX.IO analyst said he would need to see a meaningful first-day pop, ideally above 25-30%, creating a visible wealth effect, combined with the stock maintaining its valuation after the initial hype fades.
“The most important signal won’t be the first trading day itself but what happens several weeks later,” he said. If investors continue treating SpaceX as a successful trade while Bitcoin ETF outflows stabilize, the probability of profits gradually rotating into high-beta assets, including crypto, increases.
Looking aheadMcCarthy put it more directly: the real pressure is not about one IPO but about a broader structural shift, as traders and exchanges pivot toward offering 24/7 exposure to equities and real-world assets.
