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 the initial surge of over 83% on Bullish's first day of trading and 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 had plummeted from its issuance price of $28 to about $5, evaporating over 80% from its peak after going public; the company recently laid off 30% of its staff 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 had 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 by 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 the actual transaction amount for these licenses will not exceed a few million dollars due to the complex and time-consuming transfer process, which is merely a drop in the bucket for a company that lost $585 million last year.

The Aftermath of the Celebration: The End of 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 initial public offering 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 issuance 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 issuance price set at $28. The stock opened high at $37, closing the day up over 14%, with an overall valuation of $3.3 billion, attracting 20 times oversubscription. During the same period, Circle, eToro, and Figure Technologies also entered the capital market, leading to a surge in discussions about the "opening of the crypto IPO window."

Market commentary generally viewed this as a declaration for an industry that had experienced multiple collapses to move 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, with 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 as high as $282 million. One of the core reasons for the widening losses is the rapid increase 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 listing-related expenses being the main drag, even though the quarterly revenue doubled to $50.6 million compared to the previous period, it still could not 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 per year in 2026, a rise of 22.5%; anti-money laundering (AML) and know your customer (KYC) processes accounted for 40% of the compliance budget, making it the largest single cost item, forcing many companies to establish dedicated compliance departments to meet regulatory demands.

For public companies, this cost list must be further 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 the public release of quarterly financial reports. Even large entities 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 status bring immense financial pressure.

Structural Exhaustion of Altcoin Attraction

On the other hand, Gemini's predicament is a microcosm of the broader shift 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 overflowed to 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 for 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 below key support levels such as the 50-week moving average.

Despite multiple altcoin ETFs for Solana, XRP, Dogecoin, Chainlink, and others being approved in 2025, fund inflows remained highly concentrated in Bitcoin and Ethereum products. Altcoin ETFs merely broadened the choices without substantially shifting fund allocations. The global ETF head of asset services at 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 space, may now be gradually disappearing.

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

On the other side of this market shift is the significant expansion of investment options for investors. In 2021, an institutional investor wanting to allocate to the crypto market had very limited choices: directly buying coins, buying Coinbase stock, or buying Grayscale's GBTC trust, enduring its long-term negative premium. By 2025, this list of options had become quite rich: Bitcoin spot ETFs, Ethereum spot ETFs, Strategy (MSTR), Bitmine (BMNR)……

The rise of crypto concept 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 significant portion of the funds being redirected 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. A shallow order book means that any relatively larger buy or sell orders can cause severe volatility, which in turn scares off institutional funds that require predictable liquidity, creating a vicious cycle.

Where Did the Premium Go After the Extralegal Dividends Disappeared?

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

First is the regulatory arbitrage premium: non-compliant exchanges or projects do not bear regulatory costs, resulting in a profit structure that is inherently superior 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 mid-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 fees" of regulation.

Second is the liquidity scarcity premium: when the crypto market was still a niche asset with extremely high entry barriers, early participants naturally enjoyed scarcity dividends. However, with the proliferation of spot ETFs and the listing of crypto concept 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 predicament lies in the fact that it spent ten years building "the most compliant crypto exchange" and realized this brand into an IPO premium at the right moment. However, the reality after going public is that it 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: the actual usage of protocols, the liquidity depth of exchanges, and the sustainability of institutional adoption. In this world that is closer to "traditional financial logic," the era of relying on narratives to support valuations may have quietly come to an end.