The End of the Crypto Premium? Observing Market Logic Shifts from Gemini's Listing Challenges

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 markets, pushing their market caps to over $620k at one point. The market generally viewed going public as a historic declaration for crypto exchanges to shed their wild growth and mainstream themselves. However, in just half a year, reality has offered a completely different answer.

From Bullish’s first-day surge of over 83% and Gemini attracting 20 times oversubscription, to now plummeting stock prices, layoffs, and mounting compliance costs, this is not just a dilemma for a single exchange but points to a more fundamental issue: as the legal privileges of crypto assets gradually disappear, how much of the previous overvaluation relative to traditional finance remains?

Can Gemini hold on? Market cap halved, layoffs at 30%

On April 11, 2026, Bloomberg revealed the harsh reality that Gemini founders Tyler Winklevoss and Cameron Winklevoss are least willing to face. Gemini’s stock has fallen from its IPO price of $28 to about $5, eroding over 80% from its peak. Recently, the company laid off 30%, exited multiple international markets, and three key executives—the COO, CFO, and General Counsel—have also left.

More troubling is the capital structure issue. One of the current proposals involves asking the Winklevoss brothers to waive the hundreds of millions of dollars they lent to the company through Winklevoss Capital Fund LLC, possibly by converting this debt into equity. As of the end of December 2025, Gemini still owed about 4,619 Bitcoin, worth over $330 million at current market prices.

The company currently has about 445 employees. Although its stock rebounded 9% in a single day amid rumors of a buyer for its closed overseas licenses, it has still fallen more than 50% since the start of the year. These licenses are expected to fetch no more than a few million dollars due to complex and time-consuming transfer procedures, which is a mere drop in the bucket for a company that lost $585 million last year.

The aftermath of the frenzy: the end of the IPO wave

To understand Gemini’s predicament, one must look back to the crypto industry’s IPO boom in summer 2025. On August 13, 2025, Bullish (NYSE: BLSH) completed its IPO at $37 per share, raising $1.15 billion. On its first day, the stock surged past $100, eventually closing at $68, up over 83% from the IPO price, with a market cap exceeding $10 billion. BlackRock and Ark Invest had already announced intentions to buy up to $200 million worth of shares before the offering, and retail enthusiasm further fueled the hype.

Less than a month later, Gemini followed suit, listing on Nasdaq on September 12 at an IPO price of $28, opening at $37, and rising over 14% during the day. Its overall valuation reached $3.3 billion, with 20 times oversubscription. During the same period, Circle, eToro, and Figure Technologies also entered the capital markets, creating a buzz about a “crypto IPO window opening.”

Market commentary generally viewed this as a sign that an industry that had experienced multiple collapses was moving toward mainstream acceptance. However, the reality turned out to be quite different. Gemini’s first-day opening at $37 quickly declined, and within less than half a year, its stock fell below $5, a drop of over 80% from its peak. Bullish performed relatively better but also faced pressure and declined after Bitcoin’s downturn.

Compliance burdens: rising audit and legal costs add financial strain

Going public brought not only capital but also a mounting bill. Gemini’s revenue in the first half of 2025 was only $67.9 million, while its net loss reached $282 million. One of the main reasons for the widening losses was the rapid increase in regulatory and compliance costs. The first quarterly report after going public showed a net loss of $159.5 million in Q3, mainly due to high marketing and listing-related expenses, even though quarterly revenue doubled to $50.6 million, still insufficient to offset costs.

This isn’t unique to Gemini but a challenge faced by the entire industry. According to CoinLaw, the average compliance cost for small and medium-sized crypto firms increased from $620k in 2025 to about $760k annually in 2026, a 22.5% rise. Anti-money laundering (AML) and customer identity verification (KYC) processes account for 40% of compliance budgets, representing the largest single expense. Many firms have had to establish dedicated compliance departments to meet these demands.

For listed companies, this cost burden is even greater: audit fees, legal counsel, regular reporting to the U.S. Securities and Exchange Commission (SEC), investor relations responding to inquiries, and market pressures following quarterly disclosures. Even Coinbase, a giant, faced a $100 million AML and cybersecurity compliance fine from the New York State Department of Financial Services (NYDFS), with $50 million in direct fines and another $50 million allocated for remediation.

Gemini exemplifies a compliance-first strategy, branding itself as “the most compliant crypto exchange.” Ironically, this approach makes it more vulnerable in a bear market: trading volume shrinks, revenue declines, but the heavy compliance costs continue to pile up, creating significant financial pressure.

Structural exhaustion of altcoin appeal

On the other hand, Gemini’s struggles reflect a broader shift in the crypto market, most visibly in the altcoin sector. Historically, each bull market featured a “season of altcoins”: after Bitcoin surged, funds flowed into Ethereum, then Solana, and various small-cap tokens, creating waves of wealth transfer. The premise was that “the crypto market is a closed liquidity pool,” where capital, once in, only rotates among different assets.

By 2025, this premise was broken. By year-end, the total assets under management in crypto exchange-traded products (ETPs) reached nearly $180 billion. Bitcoin ETFs became the main entry point for institutional capital, exerting a certain squeeze on altcoins. Additionally, Bitcoin’s dominance hovered around 59% throughout 2025, and the total market cap of non-Bitcoin cryptocurrencies (TOTAL2 index) fell from $1.77 trillion in October to $1.19 trillion in December—a 32% decline, breaking below key support levels like the 50-week moving average.

Despite approvals for several altcoin ETFs—Solana, XRP, Dogecoin, Chainlink—fund flows remained heavily concentrated in Bitcoin and Ethereum products. Altcoin ETFs merely broadened options without significantly shifting capital allocation. BNY Mellon’s global ETF head noted that altcoin ETFs “are unlikely to expand at the same scale because they are highly sensitive to market cycles, with demand fluctuating with price movements.”

In other words, institutional investors now have a “compliant, low-friction entry channel,” no longer needing to take on liquidity risks in secondary markets to buy Solana. Meanwhile, the overvaluation of altcoins, once driven by high entry barriers and the prospect of illegal wealth, is gradually eroding.

Crypto concept stocks vs. altcoins: a zero-sum game for liquidity

Another aspect of this market shift is the expanded toolkit for investors. In 2021, institutional investors interested in crypto had very limited options: buy coins directly, buy Coinbase stock, or buy Grayscale’s GBTC trust, which traded at a long-term discount. By 2025, the list had grown to include Bitcoin spot ETFs, Ethereum spot ETFs, Strategy (MSTR), Bitmine (BMNR), and more.

The rise of crypto concept stocks and ETFs has, objectively, acted as a “liquidity drain” for altcoins. The global assets under management in crypto ETPs have reached nearly $180 billion, with a significant portion of funds diverted from the potential pool of altcoin investments. Large capital no longer needs to bear the tail risks associated with opaque audits, smart contract vulnerabilities, or liquidity droughts typical of altcoins, while still gaining exposure to crypto market risk.

This has led to worsening liquidity in the altcoin market. Shallow order books mean that even relatively large buy or sell orders can cause sharp price swings, which in turn scare away institutional investors seeking predictable liquidity, creating a vicious cycle.

Where do the premiums go after the disappearance of legal privileges?

It can be said that the “excess premiums” of crypto assets have never been baseless bubbles—they have a real structural origin.

First is regulatory arbitrage premiums: unregulated exchanges or projects, free from compliance costs, enjoy inherently higher profit margins than compliant competitors. But as compliance costs globally converge, the average compliance expenditure for small and medium-sized crypto firms increased by 22.5% in mid-2025, with compliance staff numbers rising steadily. The spread is being squeezed. Whether it’s listed Gemini or unlisted small exchanges, they are all paying the “entry fee” for regulation.

Second is liquidity scarcity premiums: when the crypto market remains a niche asset class with high entry barriers, early participants enjoy scarcity benefits. But with the proliferation of spot ETFs and listed crypto concept stocks, the friction costs for institutional entry have dropped sharply. The previous “superior returns only obtainable through secondary markets” are no longer valid.

Gemini’s predicament lies in its decade-long effort to build “the most compliant crypto exchange,” and at the right moment, turning this brand into a listing premium. Yet, the reality after going public is that it has entered a competitive environment where “compliance is now a basic threshold, not a differentiator,” and it must bear heavier fixed costs than any non-listed competitor.

For the entire market, the redemptive premiums that once supported excess returns in crypto assets are being gradually digested. What remains are the fundamentals: actual protocol usage, exchange liquidity depth, and sustainable institutional adoption. In this more “traditional finance” world, the era of valuation supported by narratives may have quietly come to an end.