Key takeaways
Revenue model drives valuation. Custody fees are priced higher than trading commissions
Not all crypto IPOs are equal. Infrastructure commands premiums; exchanges face scrutiny.
Segment holdings by characteristics. Regulatory status and client type determine exit paths
Public markets reward predictability. Recurring revenue beats volume-dependent business models.
Public markets just showed their hand
BitGo priced its IPO at $18 in January 2026, above its marketed range, and opened trading at $22.43. Headlines declared crypto IPOs were back. By day's end, shares had settled to close up roughly 3%.
The gap between the opening pop and the closing price tells a more interesting story: public investors showed up eager for the deal, then quickly recalibrated. What they were buying, and what they were willing to pay for it, deserves closer attention.
What BitGo's pricing actually reveals
BitGo raised $212.8 million, valuing the company at $2.1 billion—a richer price tag than public markets have given larger crypto companies like Coinbase.
The headline revenue figure, approximately $3 billion in 2024, can be misleading. Under accounting rules, certain trading activities inflate top-line numbers even when economic value retained is small. The figure that matters is subscription and service revenue: $120.7 million in 2024, up 56% year-over-year. According to VanEck's Matthew Sigel, custody and staking account for over 80% of what actually drives valuation.
Public investors weren't buying crypto trading exposure but rather recurring fees tied to assets under management, i.e., revenue that arrives whether markets are busy or quiet. Exchanges make money when people trade, which means income rises and falls with market activity. Investors paid more for the steadier model.
Profitability as a differentiator
BitGo reported $35.3 million in net income for the first nine months of 2025 (per S-1 filing). Among crypto companies approaching public markets, profitability remains rare. Gemini disclosed losses of $283 million in H1 2025; Circle's $157 million net income depends almost entirely on interest rates and a revenue-sharing agreement with Coinbase.
The premium reflects a business public investors can evaluate using familiar custodian frameworks, without needing to model token prices or DeFi mechanics.
Why BitGo priced like a trust company
BitGo looks more like a trust company than a crypto startup. Three characteristics explain the premium, and each one applies to portfolio evaluation beyond this single IPO.
Regulatory positioning
BitGo holds a South Dakota trust charter, a New York trust license, and received conditional approval for an OCC national bank charter in December 2025. That regulatory stack positions the company alongside traditional financial institutions rather than offshore crypto operations.
The OCC charter, in particular, signals a level of compliance infrastructure that institutional allocators require before committing capital.
Institutional client concentration
BitGo serves hedge funds, asset managers, and custodians. The company processes approximately 20% of global on-chain Bitcoin transactions by value. They also manage over $90 billion in assets for more than 4,600 institutional clients who represent the dominant share of revenue.
This client base creates revenue stability. Institutions typically move more deliberately on custody relationships, and switching costs tend to be higher than in retail markets. Compare that to retail-focused exchanges, where users migrate freely based on fees, features, or promotional offers.
Distance from speculation
BitGo doesn't trade for its own account, doesn't issue tokens, and has no DeFi protocol exposure. The business model requires no explanation of crypto mechanics to public investors.
A portfolio manager evaluating BitGo can apply the same familiar custodian models used for State Street, BNY Mellon, or other asset servicers. That legibility expands the pool of potential buyers and the valuation multiples they'll pay.
Why trading-dependent models face different dynamics
If BitGo represents one end of the spectrum, exchanges and trading-focused companies represent the other. Gemini, Circle, and BitGo all reached public markets. But the valuations and post-IPO trajectories diverged.
Gemini's trajectory
Gemini priced its IPO at $28 in September 2025, above its initial range. Shares popped 14% on the first day. Within days, the stock traded below the IPO price and has hovered around $25 since. When token prices surge, trading volumes follow. When markets cool, so does revenue. Public investors price that cyclicality into valuation multiples.
Circle's different risk profile
Circle's June 2025 IPO was 25 times oversubscribed, with shares surging 700% from the $31 IPO price at their peak. But nearly 99% of revenue comes from interest income on USDC reserves. That income depends on rates the company doesn't control, and 50% flows to Coinbase under an existing revenue-sharing agreement.
The IPO success doesn't erase those dependencies. It prices them.
Coinbase's persistent discount
Coinbase remains well below its April 2021 direct listing levels despite being the largest US crypto exchange. Trading-dependent revenue and crypto cycle exposure have kept the stock range-bound while the S&P 500 reached new highs. Both Coinbase and BitGo serve institutional clients and operate in crypto, but public markets discount that cyclicality accordingly.
What this means for M&A positioning
Access to premium IPO paths changes negotiating dynamics in private markets. Companies with credible public market alternatives can reject unfavorable acquisition terms. The alternative is real, not hypothetical.
Negotiating from strength
BitGo terminated a potential acquisition of Prime Trust in 2023 after concluding that the target didn't have the finances to complete the deal. That selectivity becomes easier when the company has other paths to liquidity. Infrastructure players with public currency, or credible IPO paths, can afford to be patient.
Companies without premium IPO profiles face a different scenario. Waiting costs money. Strategic M&A may offer better risk-adjusted outcomes than holding out for public market windows that arrive late, if they arrive at all.
Timeline pressure
Companies burning cash without a clear public market path face compounding pressure. Each funding round resets valuation expectations. Down rounds damage morale and signal weakness to potential acquirers. The longer the path to exit remains uncertain, the weaker the negotiating position becomes.
This dynamic is logical but forward-looking. Actual deal flow over the next 12 to 18 months will test whether constrained exit paths translate to discounted M&A valuations in practice.
Portfolio strategy when valuations diverge
The valuation spread across these three IPOs creates a practical sorting mechanism for crypto-adjacent holdings. Each position in a portfolio can now be measured against specific characteristics that public markets have priced.
Segment by revenue model
"Crypto" is too broad for portfolio analysis. A regulated custodian and a retail exchange sit in different risk categories, carry different exit profiles, and respond differently to market cycles. Grouping them under a single allocation obscures those differences and makes it harder to size positions or time exits accurately.
The public investor test
A useful heuristic: would institutional public market investors understand this business without a crypto tutorial? If yes, exit optionality is stronger. If the value proposition requires explaining token mechanics, DeFi yields, or blockchain consensus, the pool of potential buyers narrows.
BitGo passes this test. A traditional asset manager can evaluate it using familiar valuation lenses. Many crypto-native businesses (e.g. DeFi protocols, token issuers, DAOs) do not pass.
Regulatory status as valuation driver
Not all licenses carry equal weight. An OCC charter signals something different than a state BitLicense, which signals something different than offshore registration. Federal pathways can open doors that state alternatives don't.
Geographic spread also impacts status. BitGo holds licenses across multiple US states plus international registrations. Single-jurisdiction operators face concentration risk if sentiment shifts. How many independent regulatory relationships does the company maintain?
Watch the fine print on pending applications. BitGo's OCC charter remains conditional. "Approved" and "conditionally approved" aren't the same thing, and public markets price the distinction.
Post-IPO performance as signal
First-day pops tell an incomplete story. Gemini popped 14% on day one and now trades below its IPO price. Circle surged 700% at its peak. BitGo settled to close up 3% after an initial 25% surge.
The divergence across these three stocks over the next year will clarify whether public markets consistently reward infrastructure profiles or whether BitGo's premium was a one-time pricing event.
Action steps for fund managers
These dynamics translate into specific portfolio review actions:
Segment holdings by revenue model: Categorize crypto-adjacent positions by whether revenue is recurring (custody, staking, compliance services) or cyclical (trading commissions, token appreciation, retail engagement).
Verify regulatory positioning: Confirm whether holdings have trust charters, OCC approval pathways, or equivalent regulatory status that signals institutional-grade operations to public markets.
Monitor post-IPO performance: Track how Gemini, Circle, and BitGo perform over the next six to 12 months. Divergence will reveal which characteristics public markets reward sustainably.
Update LP communication: Reframe crypto exposure around specific business model characteristics rather than category labels. "We hold custody infrastructure with regulated status and institutional clients" lands differently than "we have digital asset exposure." Specificity reduces skepticism.
Bottom line
Three IPOs, three business models, three valuations. The spread between BitGo, Circle, and Gemini gives fund managers a framework: custody characteristics price differently than trading exposure. That distinction shapes exit timing, M&A leverage, and how allocators hear GP pitches.
The question has shifted from "Do they hold crypto?" to "Which type, and does it fit the profile public markets reward?"
Kraken's filing will test whether the pattern holds. Either outcome provides a signal.
Collateral Partners helps translate complex portfolio positioning into clear investor narratives. Get in touch to discuss how your materials frame emerging asset class exposure.
