Bitcoin’s “IPO Moment”: Volatility Is Back, and So Is the Opportunity

The crypto market is going through a sharp risk-off pullback, driven less by crypto-specific problems and more by broader market forces and a macro and positioning unwind. Over the last several sessions, investors have had to adjust their expectations about interest rates and market liquidity, leading to broad deleveraging across multiple asset classes. In this kind of environment, bitcoin often behaves like a high-beta macro asset: it sells off quickly when financial conditions tighten, then stabilizes as forced selling clears and marginal buyers return.

What is notable about this episode is that, unlike prior crypto winters, the downturn is not being led by spectacular scandals, major exchange bankruptcies, or a single dominant plumbing failure. The stress is showing up more clearly in the parts of the ecosystem that are most sensitive to activity. Publicly traded trading platforms have been hit hard because their revenues are directly tied to volumes. As Coinbase Global Inc. and peers like Gemini Space Station Inc. and Bullish have seen trading volumes contract, analysts have moved quickly to reset expectations, and equity prices have repriced accordingly. In other words, the stock prices of these companies are reflecting investor expectations about near-term trading activity, even though the crypto networks themselves continue to function normally.

This is where the “bitcoin IPO” analogy is useful. Bitcoin is effectively being admitted into the institutional mainstream, not as a company, but as an asset class that can be owned inside familiar wrappers, sized in model portfolios, and traded within standard risk systems. That institutionalization is a long-term positive, but it comes with a transitional phase where flows can amplify moves. The spot ETF channel has become a meaningful on-ramp and off-ramp, and when committees de-risk, those decisions can translate into mechanical selling through creations and redemptions. Late January flows illustrate the point: U.S. spot bitcoin ETFs saw large net outflows on multiple days, including roughly $818M on Jan 29 and roughly $510M on Jan 30. This is not “fundamentals changing overnight,” it is what institutional price discovery looks like when the market is repricing risk.

In that context, volatility is a feature, not a bug. Crypto’s defining characteristic is that it clears excess quickly. When positioning gets crowded and leverage builds, the market resets violently. Those drawdowns are uncomfortable, but they are also the mechanism that flushes leverage, transfers coins to stronger hands, and creates the conditions for the next upcycle. Recent reports also point to significant liquidations during the selloff, which is consistent with the idea that part of this move is forced, not purely discretionary.

From an investment standpoint, the key comparison to prior selloffs is the difference between solvency crises and macro-driven flow events. In 2022, the market was forced to digest insolvencies, counterparty risk, and deep trust damage that took time to repair. This time, the pressure is showing up primarily through tighter financial conditions, weaker risk appetite, and a pullback in retail activity, with the “volume complex” taking the brunt. That distinction matters because macro-driven dislocations tend to be more reversible once the marginal seller is exhausted, especially when the broader rails of adoption remain intact.

Our stance remains constructive, but not maximalist. The base case is still that institutional access, improving market structure, and the continued normalization of crypto in portfolios are secular tailwinds. The question is timing and sizing, not whether crypto has a future. For investors with an appropriate risk tolerance and a multi-year horizon, periods like this can represent an opportunity to add exposure on weakness, ideally through staged entry rather than trying to pick the exact bottom. The practical discipline is to size positions so another leg down does not force selling, and to focus on liquidity and quality rather than reaching for the highest beta. If volatility is the admission price for long-term upside, the goal is to pay it in a controlled way.

As always, the risks are real. A further tightening in financial conditions, an extended risk-off regime, or additional ETF outflows could keep pressure on prices in the near term. But stepping back, this is consistent with an asset class undergoing institutional “IPO-like” integration: more participation, more headline sensitivity, more flow-driven air pockets, and ultimately a broader, more durable ownership base. That is why we view the current drawdown as a potential buying opportunity for appropriately positioned investors, rather than a reason to abandon the space.

In crypto, the gut-check moments are usually where the long-term returns get made.

Strong Convictions. Loosely Held.

— Nicholas Mersch, CFA

Sources + Further Reading:

The content of this document is for informational purposes only and is not being provided in the context of an offering of any securities described herein, nor is it a recommendation or solicitation to buy, hold or sell any security. The information is not investment advice, nor is it tailored to the needs or circumstances of any investor. Information contained in this document is not, and under no circumstances is it to be construed as, an offering memorandum, prospectus, advertisement or public offering of securities. No securities commission or similar regulatory authority has reviewed this document, and any representation to the contrary is an offence. Information contained in this document is believed to be accurate and reliable; however, we cannot guarantee that it is complete or current at all times. The information provided is subject to change without notice.

Commissions, trailing commissions, management fees and expenses all may be associated with investment funds. Please read the prospectus before investing. If the securities are purchased or sold on a stock exchange, you may pay more or receive less than the current net asset value. Investment funds are not guaranteed, their values change frequently, and past performance may not be repeated. Certain statements in this document are forward-looking.

Forward-looking statements (“FLS”) are statements that are predictive in nature, depend on or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” intend,” “plan,” “believe,” “estimate” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are, by their nature, based on numerous assumptions. Although the FLS contained in this document are based upon what Purpose Investments and the portfolio manager believe to be reasonable assumptions, Purpose Investments and the portfolio manager cannot assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on the FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed, that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.

Posted by Nicholas Mersch on Feb 2nd, 2026 —

Bitcoin’s “IPO Moment”: Volatility Is Back, and So Is the Opportunity

Purpose Bitcoin ETF