Crypto Market Accurately Prices China's Largest IPO 12 Days Early: CXMT's Opening Price Off by Just 1.4%?

The Hidden Valuation Under Capital Controls: How Hyperliquid Became the True Price Source for the IPO of China's Largest Memory Chip Company.

Written by: Forbes

Compiled by: AididiaoJP, Foresight News

Changxin Memory Technologies (CXMT) is the largest IPO in Asia so far this year. Overseas investors cannot participate directly and can only turn to the crypto market for opportunities.

The most accurate valuation of the recent IPO of China's largest memory chip manufacturer did not come from Shanghai. It actually originated from a derivatives market that is not legally recognized in China, located in a trading venue that mainland investors cannot legally access, and was published 12 days before the stock officially existed.

On July 15, a small protocol called Trade.xyz launched a synthetic market for Changxin Memory using Hyperliquid's permissionless listing framework. The closing price on the first trading day was $7.42 per share.

Twelve days later, on July 27, Changxin Memory opened on the Shanghai Stock Exchange at 49.50 yuan (approximately $7.32). The underwriters—those institutions with audited reports and regulatory authorization—set the issue price at 8.66 yuan, which was 82.5% lower than the actual opening price. In contrast, this legally ambiguous market had a deviation of only 1.4%.

Before anyone announces that the book-building system is outdated, it must be clarified that this contract did not maintain accuracy throughout. It experienced drift over 10 trading days, with a low point 16% below the final opening price and still 9.5% lower at the opening. Its most accurate guess was the first one, not the last.

Even so, a similar case occurred in May with Cerebras: the crypto market was only 1.3% off from the cash opening price, while the underwriters were off by 47%.

The Market That Built This Wall

Changxin Memory is the largest IPO in Asia this year, and almost no one outside of China can buy a share. The Northbound Stock Connect only allows inclusion of companies listed on the SSE 180 or 380 indices, or those listed on the STAR Market with a Hong Kong listing. A company that was just established two days ago does not meet either condition. Even within China, retail investors need 500,000 yuan in assets to trade on this board.

Thus, demand flowed to where blocked demand always goes. Six crypto exchanges launched some form of CXMT-related contracts, with Hyperliquid accounting for 92% of open contracts. Binance did not participate, even though it had operated a SpaceX-related market in May; even on Hyperliquid, only one of the nine builders deployed this contract. But that one builder had many willing counterparties.

Price is Prediction, Not Manipulation

Many now claim that offshore traders drove the price of CXMT on the Shanghai Stock Exchange. They did not, and they could not.

These derivatives contracts are cash-settled, and no shares are delivered to China. The peak of open contracts approached $79 million, while the fundraising scale reached $8.55 billion, accounting for far less than 1%. Moreover, it was the mainland retail investors who truly determined the price of CXMT in Shanghai, and Hyperliquid remains illegal for them.

More evidence appeared on the second trading day: global memory stocks fell sharply. Kioxia dropped 17%, SanDisk fell 15%, SK Hynix dropped 13%, and Micron fell 9%. Another Chinese memory company listed in Shanghai, Zhaoyi Innovation, also fell 16%. In contrast, CXMT rose 1% during the same window.

Figure 2 shows the price changes in the global memory sector from the close on July 27 to the close on July 29, compared with CXMT. (CXMT's price is estimated by the Trade.xyz contract oracle, which had a deviation of less than 0.3% from the official Shanghai closing price on the previous trading day.) Data source: Hyperliquid, Trade.xyz.

Meanwhile, five offshore venues pricing CXMT all marked it 3% to 5% below the Shanghai closing price, with each venue's funding rates turning negative, peaking at an annualized 6.5% on Hyperliquid.

The argument is that foreign capital wants CXMT lower, but they have no way to deliver shares to Shanghai to achieve this. Thus, all the pressure enters the basis and stays there, with bulls paying a high price to hold counterparty positions. Capital controls were not circumvented but rather repriced.

What SpaceX Has Taught Us

Six weeks ago, the same mechanism operated on SpaceX and roughly guessed its first-day performance. Then it continued on.

SpaceX's issue price was $135, and the first-day close was $161. The market price before listing was $155, which can be considered a success. Four days later, the same contract hit $228.74, 69% higher than the issue price.

After that, SPCX fell almost every week, dipping below its IPO price in mid-July, trading at $115.68 at the time of writing. Those who bought at the first-day closing price lost 28%, while those who bought at the early entry price of $200 lost 42%.

Figure 3 shows the trend of SpaceX from the pre-listing market launch to now, compared to the IPO price of $135. The light line represents the synthetic prediction, while the solid line starts from June 12 when the stock was officially listed (1-day candlestick). Data source: Hyperliquid, Trade.xyz.

Structural differences are more important than the numbers themselves. Nasdaq stocks can be held by custodians, so tokenizing SpaceX can be traded in parallel with perpetual contracts and remain anchored.

CoinMarketCap Research found that tokenized SPCX closely tracked the issue price of $135, while derivatives were 30% higher. However, A-shares cannot be custodied offshore at all. Buyers of SpaceX receive a claim to the company, while buyers of CXMT can only ever make a bet.

The Unnamed Risks

The real danger lies in discretion. Trade.xyz arbitrarily set the opening reference price for CXMT at $5 without disclosing the basis; established a boundary that produced a first-day ceiling of $8.64; compressed the pre-listing funding rate to about 1% of normal intensity, shutting down the conventional damping mechanism; and retained the right to settle on a time-weighted average if the listing is delayed. One entity controls all the leverage.

Meanwhile, regulation is tightening on both sides. The Chicago Mercantile Exchange and the New York Stock Exchange have requested Washington to review Hyperliquid, while Chinese securities regulators launched a two-year crackdown on illegal cross-border trading in May, imposing over $330 million in fines on three offshore brokerages. However, for the market that first priced its national champion enterprise, it has yet to say a word.

These crypto exchanges excel at guessing where a stock will open but are not good at knowing what it is truly worth. CXMT is the advertisement, SpaceX is the receipt. Obtaining a price never equates to obtaining a return.