The End of Crypto Premium? Observing the Market Logic Shift from the Dilemma After Gemini's Listing

Author: Chloe, ChainCatcher

In the second half of 2025, the crypto industry experienced a wave of IPOs, with Bullish and Gemini successively entering the capital market, and their market values once soaring to tens of billions of dollars. The market generally believed that going public was a historic declaration for crypto exchanges to break free from wild growth and move towards the mainstream. However, just six months later, reality provided a completely different answer.

From Bullish's initial public offering (IPO) day surge of over 83% to Gemini attracting 20 times oversubscription, to the current stock price collapse, layoffs, and overwhelming compliance costs, this is not just a dilemma for one exchange but points to a more fundamental question: As the extralegal dividends of crypto assets gradually disappear, how much of an excess premium remains compared to traditional finance?

Can Gemini Hold On? Market Value Halved, Layoffs of 30%

On April 11, 2026, Bloomberg unveiled the reality that Gemini founders Tyler Winklevoss and Cameron Winklevoss least wanted to face. Gemini's stock price has plummeted from an issue price of $28 to about $5, evaporating over 80% from its peak after going public; the company recently laid off 30% of its workforce and exited multiple international markets, while three core executives—Chief Operating Officer, Chief Financial Officer, and Chief Legal Officer—also chose to part ways.

The more challenging issue is the capital structure. One of the proposals currently under discussion is to ask the Winklevoss brothers to waive the hundreds of millions of dollars in loans they provided to the company through Winklevoss Capital Fund LLC, possibly by converting this debt into equity. As of the end of December 2025, Gemini still has an outstanding debt of 4,619 bitcoins, amounting to over $330 million at current market prices.

The company currently has about 445 employees. Although the stock rebounded 9% in a single day due to external reports of buyers negotiating for its closed overseas licenses, it has still fallen over 50% year-to-date. It is expected that these licenses, due to complex and time-consuming transfer procedures, will not fetch more than a few million dollars, a mere drop in the bucket for a company that lost $585 million last year.

The Aftermath of the Celebration: The Curtain Falls on the IPO Wave

To understand Gemini's predicament, one must first return to the IPO feast of the crypto industry in the summer of 2025. On August 13, 2025, Bullish (NYSE: BLSH) priced its IPO at $37 per share, raising $1.15 billion. On its first day of trading, the stock price briefly exceeded $100, ultimately closing at $68, an increase of over 83% from the issue price, with a market value surpassing $10 billion. BlackRock and Ark Invest had already expressed intentions to subscribe for shares worth up to $200 million before the IPO, and retail enthusiasm further fueled the momentum.

Less than a month later, Gemini followed suit, listing on Nasdaq on September 12 with an issue price of $28, soaring to $37 at the open, closing up over 14% for a total valuation of $3.3 billion, and attracting 20 times oversubscription. During the same period, Circle, eToro, and Figure Technologies also entered the capital market, leading to widespread discussions about the "crypto IPO window being wide open."

Market commentary generally viewed this as a declaration of an industry that had experienced multiple collapses moving towards the mainstream; however, it ultimately provided a completely different answer. Gemini opened at $37 on its first day, but subsequently fell, dropping below $5 in less than six months, a decline of over 80% from its peak; while Bullish performed relatively better, it also faced pressure and retreated after Bitcoin's decline.

Compliance Burden: Rising Audit and Legal Fees Bring Financial Pressure

The IPO brought not only capital but also a continuously growing bill. Gemini's revenue in the first half of 2025 was only $67.9 million, while its net loss during the same period reached $282 million. One of the core reasons for the widening losses is the rapid rise in regulatory and compliance costs. The first quarterly report after going public showed a net loss of $159.5 million in the third quarter, with high marketing and IPO-related expenses being the main drag, even though the quarterly revenue doubled to $50.6 million, it was still insufficient to offset the losses.

This is not a dilemma unique to Gemini but a cost issue that the entire industry must face. According to CoinLaw statistics, the average compliance cost for small and medium-sized crypto companies increased from $620,000 in 2025 to about $760,000 in 2026, a rise of 22.5%; anti-money laundering (AML) and know your customer (KYC) processes account for 40% of compliance budgets, making them the largest single cost, forcing many companies to establish dedicated compliance departments to meet regulatory demands.

For publicly listed companies, this cost list must be doubled: audit fees, legal advisory fees, compliance expenses for regular reporting to the U.S. Securities and Exchange Commission (SEC), investor relations departments to respond to inquiries from institutional investors, and market pressure following quarterly earnings releases. Even large companies like Coinbase have faced a $100 million anti-money laundering and cybersecurity compliance fine from the New York State Department of Financial Services (NYDFS), of which $50 million was a direct fine, and another $50 million was for remediation efforts.

Gemini is a typical example of a compliance-first strategy, long branding itself as "the most compliant crypto exchange." Ironically, this strategy has made it more vulnerable than any competitor during a bear market: as trading volumes shrink, revenues directly decline, but the compliance costs accumulated to maintain its public listing create significant financial pressure.

Structural Exhaustion of Altcoin Attractiveness

On the other hand, Gemini's predicament is a microcosm of the broader transformation in the crypto market, which is most clearly visible in the altcoin market. In every previous bull market, the altcoin season was almost a standard plot: after Bitcoin surged, funds flowed into Ethereum, then to Solana, and then to various small-cap tokens, creating waves of wealth transfer effects. The premise of this logic is that "the crypto market is a closed pool of liquidity," where funds can only rotate between different assets once they enter.

However, in 2025, this premise was broken. By the end of 2025, the global asset management scale of crypto exchange-traded products (ETPs) reached nearly $180 billion, with Bitcoin exchange-traded funds (ETFs) becoming the core entry point for institutional funds, exerting a certain crowding-out effect on altcoins. Additionally, Bitcoin's dominance hovered around 59% throughout 2025, while the TOTAL2 index of the overall market capitalization of non-Bitcoin cryptocurrencies fell from a peak of $1.77 trillion in October to $1.19 trillion in December, a decline of 32%, breaking through key support levels like the 50-week moving average.

Despite several altcoin ETFs for Solana, XRP, Dogecoin, Chainlink, and others being approved in 2025, the inflow of funds remains highly concentrated in Bitcoin and Ethereum products. Altcoin ETFs merely broadened the choices without substantially shifting capital allocation. The global ETF head of BNY Mellon pointed out that altcoin ETFs "are unlikely to expand at the same scale due to their high sensitivity to market cycles, with demand fluctuating with price movements."

In other words, institutional funds now have a "compliant and low-friction entry channel," and they no longer need to bear liquidity risks in the secondary market to buy Solana. On the other hand, the excess premium of altcoins, which once stemmed from their high friction entry barriers and the expectation of getting rich in an extralegal environment, may now be gradually disappearing.

Crypto Stocks vs. Altcoins: A Zero-Sum Game of Liquidity

Another aspect of this market transformation is that investors' means have been significantly expanded. In 2021, an institutional investor wanting to allocate to the crypto market had very limited options: directly buying coins, buying Coinbase stock, or investing in Grayscale's GBTC trust, enduring its long-term negative premium. By 2025, this list of choices has become quite rich: Bitcoin spot ETF, Ethereum spot ETF, Strategy (MSTR), Bitmine (BMNR)......

The rise of crypto stocks and ETFs has objectively played the role of a "liquidity siphon for altcoins." The global asset management scale of crypto ETPs has reached nearly $180 billion, with a considerable proportion of funds being diverted from the potential pool that previously flowed into altcoins. Large funds can gain exposure to the crypto market without bearing the unique tail risks of altcoins, such as audit opacity, contract vulnerabilities, and liquidity exhaustion.

The result is a continuous deterioration of liquidity in the altcoin market. Shallow order books mean that any relatively larger buy or sell orders can cause severe volatility, which in turn drives away institutional funds that require predictable liquidity, creating a vicious cycle.

After the Extralegal Dividends Disappear, Where Does the Premium Go?

It can be said that the "excess premium" of crypto assets has never been an unfounded bubble; it has real structural sources.

The first is regulatory arbitrage premium: non-compliant exchanges or projects do not bear regulatory costs, leading to a naturally superior profit structure compared to compliant competitors. However, as compliance costs converge globally, the average compliance expenditure for small and medium-sized crypto companies had risen by 22.5% by 2025, with the number of compliance personnel continuously increasing, this profit margin is being eroded. Both listed Gemini and unlisted small exchanges are paying for the "entry fee" of regulation.

The second is liquidity scarcity premium: when the crypto market was still a niche asset with high entry barriers, early participants naturally enjoyed a scarcity dividend. However, with the proliferation of spot ETFs and the listing of crypto stocks, the friction costs for institutional entry have significantly decreased, and the previous "excess returns that could only be obtained in the secondary market" no longer exist.

Gemini's dilemma lies in the fact that it spent ten years building "the most compliant crypto exchange" and realized this brand into an IPO premium at just the right moment. However, the reality after going public is that it has entered a competitive environment where "compliance is a basic threshold rather than a differentiated advantage," yet it must bear heavier fixed costs than any non-listed competitor.

For the entire market, those dividends that once supported the excess returns of crypto assets are being digested one by one by the market. What remains is the true fundamentals: actual usage of protocols, liquidity depth of exchanges, and sustainability of institutional adoption. In this world that is closer to "traditional financial logic," the era of supporting valuations through narratives may have quietly come to an end.