Individual investors typically can’t buy or sell shares in companies before their initial public offerings (IPOs). But that all changed in the weeks leading up to the highly anticipated Space Exploration Technologies (SPCX +9.43%) IPO.
Starting in mid-May, crypto investors could buy and sell pre-IPO shares in SpaceX, using financial derivatives traded on the Hyperliquid (HYPE +4.58%) decentralized cryptocurrency exchange. As can be imagined, a speculative frenzy soon ignited as crypto investors attempted to predict SpaceX’s future valuation before it officially went public on June 12.
Let’s take a closer look at what pre-IPO trading could mean for crypto investors.
The rise of pre-IPO trading
First, crypto investors using Hyperliquid were not actually buying and selling shares of SpaceX. Instead, they were buying synthetic shares of SpaceX. That meant there was absolutely no guarantee that the value of those synthetic shares would align with the actual value of SpaceX stock once it started trading on Wall Street.
Space Exploration Technologies
Today’s Change
(9.43%) $10.80
Current Price
$125.33
Key Data Points
Market Cap
Day’s Range
$115.72 – $126.71
52wk Range
$104.83 – $225.64
Volume
4.3M
Avg Vol
114.9M
Secondly, the crypto investors were using Hyperliquid, an offshore, fully decentralized cryptocurrency exchange, to execute their trades. And that introduced several complications. Namely, Hyperliquid still lacks the blessing of U.S. regulators, so U.S. investors were barred from pre-IPO trading. That meant offshore investors were helping to determine the value of SpaceX.
However, given all the hoopla surrounding the SpaceX IPO, many crypto investors took advantage of the new market opportunity. At one point, SpaceX’s pre-IPO shares were the most actively traded on Hyperliquid, far surpassing trading in cryptocurrencies such as Bitcoin.
Every time a SpaceX pre-IPO trade was executed, Hyperliquid collected a transaction fee. And investors who might have been locked out of the IPO allocation suddenly had a way to get involved. So you can immediately see the perfect alignment of incentives here: Investors get access to pre-IPO companies, while cryptocurrency exchanges get access to a new source of transaction revenue.
Image source: Getty Images.
Similar types of pre-IPO trading opportunities could be coming soon. Given all the speculation around AI, forthcoming IPOs from Anthropic and OpenAI are most likely to attract significant activity. But if you check out the IPO calendar for 2026, there are plenty more big tech names on the list.
Caveats for investors
There are plenty of things to watch out for here for the average investor. The pre-IPO shares convey zero ownership rights. They are not equity; they are financial derivative that represent the shares. It’s more helpful to think of them as a (very) short-term price discovery mechanism.
And there is always the risk that the pre-IPO shares do not align with the price of the actual shares once they start trading. When it came to SpaceX, though, many investors were willing to ignore this potential risk, given all the hype.
Finally, there’s exchange risk. Right now, if you’re a U.S. investor, your options to participate in this pre-IPO market are limited. Centralized exchanges such as Coinbase Global plan to offer extensive pre-IPO trading, but the regulatory environment remains at odds with this type of activity. For now, Hyperliquid is off-limits to U.S. investors.
Furthermore, it’s debatable whether the world of traditional finance will be happy about the rise of pre-IPO trading. Wall Street investment bankers get paid big bucks to price pre-IPO companies, and they probably oppose the launch of parallel crypto markets doing the same thing.
And it’s unclear how companies such as Anthropic or OpenAI will feel about this type of speculative frenzy ahead of their market debuts. Last summer, when Robinhood Markets teased the idea of offering so-called tokenized equity in companies before they ever went public, there was immediate blowback.
The world of crypto trading is changing
Nevertheless, crypto trading is obviously changing. Crypto innovators are pushing regulators to approve new financial instruments for trading, and retail investors are increasingly open to using new markets and trading tools.
It all started with the rise of prediction markets. That led to trading in perpetual futures (known as perps), in which traders can bet on the future price of a cryptocurrency or stock, all without owning the underlying asset and with no expiration date.
Personally, I’m staying away from pre-IPO trading. It’s simply too speculative. But I can certainly understand the allure. Intriguing new opportunities are emerging for the average investor looking to trade alongside professional investors.
