Crypto traders are flocking to synthetic contracts related to Elon Musk's SpaceX, betting $1 billion in the past three days on the company's pre-IPO valuation. The SPCX perpetual future contract has drawn significant attention as a proxy market for the expected public debut of one of the largest listings in Wall Street history.
The surge in trading activity comes as retail investors face limited allocations in the heavily oversubscribed offering and look for alternative ways to gain exposure to SpaceX's valuation. The SPCX contract allows traders to bet on the company's pre-IPO price without actually owning shares, with some positioning themselves for a significant first-day jump.
However, market history cautions that early investors may face steep losses in the first year after listing. Charlie Bilello notes that major IPOs have historically lost 31% of their value in the first year and suffered peak-to-trough drawdowns of up to 53%. Jim Chanos argues that SpaceX's valuation is already too high, with a gap that dwarfs those seen in early public-market entry points.