SpaceX's IPO Sends Shockwaves Through Equities and Crypto

SpaceX's explosive IPO debut on Nasdaq has sent shockwaves through both equity and crypto markets. The company, led by Elon Musk, listed under the ticker SPCX on June 12, starting at around $135 per share before soaring nearly 60% higher to over $215 within intraday trading. This move briefly pushed SpaceX's market capitalization beyond $2.7 trillion, making it one of the most explosive IPO debuts in history.

As SPCX hit the tape, leveraged exchange-traded funds designed to offer 2x daily exposure to the stock began trading. One such product from the Defiance family saw nearly 1 million shares change hands on its first day, with the number of ETF holders for SPCX shares jumping from 4 to 40 in just one trading session. Among these new holders was BlackRock, the world's largest asset manager with over $10 trillion in assets under management.

Leveraged ETFs are designed for short-term traders and reset daily, meaning returns can diverge wildly from the underlying stock over weeks or months. This means that if SPCX goes up 10% one day and down 10% the next, a 2x leveraged fund doesn't break even, it loses money.

The SpaceX IPO also had an unexpected impact on crypto markets. The company disclosed holdings of 18,712 BTC acquired for approximately $661 million, which carried a fair value of around $1.45 billion by the IPO date, a paper gain of over 100% on Bitcoin alone.