(Bloomberg) -- Crypto funds and private investors have been snapping up shares of private digital-asset companies in anticipation that some of them could be going public in the coming months.

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Equity in companies such as stablecoin issuer Circle Internet Financial, crypto exchange Kraken and blockchain forensics provider Chainalysis has been trading more actively recently, and many of the deep discounts of a year ago have declined, according to multiple trading venues. Crypto buy-side demand in the first half of 2024 is 28% higher than it was in the second half of last year, and 126% higher than in the first half of 2023, according to Forge Global, a secondary market platform.

Prices on so-called secondaries — shares or tokens held by former or current employees or early investors — have increased along with demand. Implied prices for equity in the crypto exchange Kraken are up 77% year-to-date, while crypto firm Ripple has seen a 13% appreciation, and blockchain forensics provider Chainalysis’s is up 17%, according to Forge’s platform activity.

“There’s pretty strong individual investor demand,” said Andrew Saeta, co-head of institutional sales at Forge. “On the institutional side, we’ve definitely seen an increase. I would say the market is the most robust that we’ve seen in a while.”

Driving the renewed interest in crypto was a first half rally in Bitcoin, which hit new highs in March thanks to the launch of US exchange-traded funds investing directly in the world’s biggest cryptocurrency as well as what appears to be a recent regulatory U-turn on Ethereum. Crypto policy has even become part of the debate in the upcoming presidential campaign. Coinbase Global Inc.’s 36% surge this year has made similar private businesses look more attractive as well.

Even with the increased interest, demand is still below 2021 levels, according to several secondaries platforms and funds that are buying up the secondary tokens and equity.

“Valuations have gone up, but demand hasn’t gone up as much,” said Taran Sabharwal, the chief executive officer of Stix, a marketplace for over 50 tokens.

The secondaries market was decimated by the implosion of Sam Bankman-Fried’s crypto exchange FTX in 2022. As crypto prices fell and the industry entered crypto winter, demand declined further.

“In the blockchain market there’s been less activity since FTX, there’s almost been a buyers strike, because a lot of these institutional investors got scared,” said Brian Dixon, CEO of Off The Chain Capital, which has been buying up secondaries. “Now we are starting to see more activity in some of the names. But I do anticipate that as the markets continue to progress, and as a lot of blockchain companies’ revenues increase, we’ll see more institutional investors try to acquire more of these secondary opportunities.”

As the end of May, 25% of Dixon’s $370 million fund was comprised on secondaries, he said.

Investor Haun Ventures picked up coin security provider Fireblocks and Chainalysis at deep discounts about a year ago. But many secondaries are still trading at 40% to 70% discount to their latest round.

“It’s a good time to be re-evaluating secondary opportunities as many of larger crypto companies have shown strong operating performance over the last six months and the fundamental have improved significantly,” said Stan Miroshnik, founder of TenSquared Capital. “Many of these companies still have significant funding runway from prior rounds, are again generating cash, have weathered the down market and have come out lean and focused.”

If crypto prices continue rising, the next year-and-a-half could see the biggest wave of crypto-related initial public offerings on record, according to IPO researcher Renaissance Capital. As many as 15 companies could go public, the researcher said. Kraken is in talks for a potential pre-IPO round, Bloomberg reported earlier. In addition, crypto has become a political issue in this year’s US presidential election, which could mean a more favorable regulatory environment for the industry going forward.

“A lot of people are excited about the prospects of what’s going forward,” said Saeta of Forge. “Especially since there are going to be changes from the regulatory perspective.”

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