Chinese chipmaker ChangXin Memory Technologies (CXMT) saw its value in a crypto-based perpetual futures contract soar, leading to a $60 million liquidation for traders who bet against its pre-IPO price. The perpetual futures contract, tracking CXMT's value on the decentralized exchange Hyperliquid, peaked at $8.60 per share, giving the company an implied market capitalization of roughly $425 billion, or about 2.9 trillion yuan. This valuation would make CXMT more valuable than Industrial and Commercial Bank of China, the mainland’s largest listed company, which is valued at roughly 2.56 trillion yuan.
This outsized premium was fueled partly by offshore investors who used crypto platforms to access the highly anticipated listing, which is largely closed to foreigners and has steep barriers for mainland retail investors. The initial offer price for CXMT was set at 8.66 yuan ($1.28) per share, resulting in a valuation of 579 billion yuan at its official Shanghai listing. This significant disparity between the crypto-market valuation and the IPO price indicates that the crypto market was forecasting a much higher opening price than the initial offer.
The massive liquidation event for those shorting CXMT on Hyperliquid highlights the volatility and speculative nature of using crypto platforms for pre-IPO price discovery. While such platforms can offer informal price signals for hard-to-access assets, they are also prone to sentiment-driven swings and concentrated capital, as noted by Eric Chen, co-founder and CEO of Injective Labs. This incident underscores the risks for traders attempting to predict the trajectory of high-profile IPOs on these nascent platforms.
The event occurred amidst a broader positive trend in the memory chip market driven by AI demand and global supply shortages, factors also contributing to investor enthusiasm for CXMT. However, the subsequent drop in CXMT's crypto-derived price to around $6.35 per share after its peak suggests a normalization as the official IPO date approached and market forces began to exert more influence.
