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Will the recent crypto crash push retail investors toward IPOs?

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1. Cryptocurrencies
Cryptocurrencies are, today, very fashionable due to everything that surrounds them. Its popularity has grown over the years. This has been due to their easy use. Due to its political independence and essentially impenetrable data security, cryptocurrency users enjoy benefits that are not available to users of traditional fiat currencies and financial systems that support those currencies.
2. Evolution
Since their appearance in the past decade, cryptocurrencies have not stopped growing, but it has been this year when it seems that they have reached a turning point, since after reaching their maximum value, then their value has not stopped falling.
The lower graph shows us the evolution of cryptocurrencies since 2018. In it it can be clearly observed how since May 2021 the holding has been down.

(Source: CoinMarketCap)

3. Factors that affect cryptocurrencies

The downward trend of cryptocurrencies is not due to inexplicable circumstances, but there are certain factors that have contributed to this deterioration in value.
Controversy on social media and government controls in China
Being a virtual asset and which the average age of its buyers is 31 years, they make them more susceptible to the fury of social networks.
This can be seen with Elon Musk and his tweets about the use of cryptocurrencies -in this case bitcoin- to buy his Tesla products. At the time of its announcement in March of this year, the value of the cryptocurrency skyrocketed as can be seen in the graph below.
At the same time the Chinese government is proposing a new regulation for these currencies.
The proposed regulations include minimum fundraising thresholds and stricter requirements for auditors, according to documents filed by Nasdaq with the Securities and Exchange Commission accessed by Bloomberg News.

Likewise, the value of the currency fell drastically (more than 10% of its initial value) when the creator of Tesla announced the cessation of the use of them to purchase its products a few weeks later.


Controversy with environmental sustainability
Cryptocurrency blockchains require computers across the globe to solve complex equations to verify transactions. That practice, called mining, can be lucrative, because the people who do it earn bitcoin as a reward. Microsoft co-founder and global philanthropist Bill Gates recently told journalist Andrew Ross Sorkin that bitcoin “uses more energy per transaction than any other method known to mankind.”
4. Cryptocurrencies and Initial Public Offerings
Sometimes falling markets are beneficial to investors as they have the opportunity to invest at a much cheaper price.
Maxim Manturov, Head of Investment Research at Freedom Finance Europe said: “When considering participating in a specific IPO, retail investors should conduct a thorough investigation. First things first, attention should be paid to how the company’s profits and potential MTD increase. It is also advisable to explore the products of the company and the needs they cover, the financial situation and the liquidity of the company. A healthy debt-to-asset ratio, recognized IPO underwriters, and suggested ways to use raised funds are also worth paying attention to. ”
The Initial Public Offering
Many young investors see their opportunity to start being part of a market as volatile as this one due to the many facilities they have today.
Many of them base their studies on web pages such as that of, an application that allows them to do all the procedures with minimal commissions while allowing them to see all the information about the new outings on the stock market.
The fact of being able to be constantly informed of market movements and to be able to do your own study is one more step towards the democratization of the stock market.
In addition, for many of these investors the fall of cryptocurrencies is nothing more than an incentive to buy more, so they turn something that could seem negative into an advantage that they can take advantage of.

In the graph above you can see the growth of IPOs in the last year where they have reached the highest levels of the last decade. This signal tells us that there is a great opportunity for retail investors to be able to get started in this market if they so wish.
A good example of this is the Robinhood company, which is designing a platform that will allow its users to buy IPOs, including its own, according to Reuters.

Source: Plato data intelligence

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