Just as it looked as if bitcoin’s volatility was levelling out, markets were hit by a wave of volatility that began at the end of October and hasn’t let up, sending bitcoin’s price down to about $80,000.
These price levels and negative sentiment were last seen in April, when US President Donald Trump announced the “liberation day” trade tariffs, which led to a huge sell-off in the S&P 500 and pushed bitcoin to yearly lows of $76,000.
The sudden resurgence in volatility has triggered a swirl of theories about what may have caused it. Some analysts argue it’s a classic shift to risk-off positioning among large institutions, the same institutions previously credited with smoothing out the ups and downs.
Others point to pressure on bitcoin-treasury companies after MSCI signalled it may exclude firms heavily invested in bitcoin from flagship benchmarks. Another camp cites the US Federal Reserve’s hawkish tone during its October 29 rate cut, when bitcoin was still trading above $110,000.
It could just be a mix of the above, but some analysts have a broader theory tied to bitcoin’s underperformance relative to stocks for most of the year, which also touches on this latest correction.
The theory that bitcoin is going through a silent IPO phase was initially proposed by Wall Street veteran Jordi Visser in a Substack essay titled “Bitcoin’s silent IPO: Why this consolidation isn’t what you think”.
The essay suggests that bitcoin ownership is becoming more distributed. There are retail investors, the so-called whales who have been holding bitcoin since forever and have amassed great wealth doing so, and there are institutions, including ETF buyers. And each group is doing different things at the moment.
Visser argues that ordinary investors are waiting to see how the price plays out before they react. The whales — investors holding more than 1,000 bitcoin — are cashing in, while the ETF buyers, corporates and institutions are quietly snapping up the sold bitcoin.
“Like a traditional IPO lock-up expiration, uncomfortable, grinding, but ultimately healthy long term,” says Visser. “The silent IPO distribution led to a deeper correction as stocks finally began correcting.”
What does this have to do with an IPO, as we see with companies going public and offering shares to the general public? When traditional companies go public, ownership is distributed. Early investors who took on risk long before the IPO often see those investments pay off, sometimes enormously. Think of the early investors in Apple, Meta and Google.
Founders get wealthy, early investors cash out, and venture capitalists return money to partners. The company doesn’t die during its IPO. Rather, it transitions as ownership becomes more distributed, Visser argues.
Is bitcoin going through its IPO phase as it grinds along, underperforming stocks throughout the year, while ownership is silently distributed from early investors to later ones? It’s a compelling argument, especially as bitcoin seems to be bouncing off its November lows.
De Wit is country manager at Luno
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