Circle's stock price skyrockets, igniting a frenzy; Hayes warns of the impending 'stablecoin mania' bubble.
BitMEX founder Arthur Hayes published a blog post on Monday, issuing a stern warning about the upcoming wave of stablecoin company listings. Hayes stated that although Circle's successful IPO symbolizes the beginning of 'stablecoin mania', most newly listed stablecoin companies will be overvalued and destined to fail.
After Circle completed its IPO on June 5, its stock price performed excellently, setting a historical high of $164.7 on the 16th, soaring more than five times from the public price of $31 in just two weeks. As the only publicly listed stablecoin company, Circle has successfully secured its circulation channels based on years of experience in the industry.
However, Hayes questioned Circle's valuation, pointing out that the company pays 50% of its interest income to Coinbase, yet its market value is only 39% of Coinbase's, deeming this valuation 'extremely overvalued'. Nevertheless, he expects Circle's stock price to 'continue rising', mainly benefiting from the increasingly friendly policy environment towards cryptocurrencies in the United States.
Circulation channels are the key threshold; newcomers face a 'zero chance of success'.
Hayes emphasized that for any stablecoin issuer, the fundamental question is how to distribute its products. He pointed out that there are only three viable circulation channels: cryptocurrency exchanges, Web2 social media giants, and traditional banks. Without support from these channels, new stablecoin issuers have 'no chance of success'.
Existing circulation channels have been locked in by established players, and newcomers must pay substantial fees to exchanges or offer benefits to depositors. Furthermore, social media companies and banks are more likely to establish their own stablecoins rather than collaborate with external issuers. For instance, Tether's $USDT issuance is more than 2.5 times that of Circle's $USDC, with success hinging on the trust established within the Chinese sphere and close relationships with exchanges.
Bubble burst warning: 'shitcoin companies' packaged under financial engineering.
Hayes predicts that when a large number of stablecoin issuers flood the market to go public, the bubble will burst. He warned that these newly listed companies in the U.S. will use financial engineering, leverage, and clever performances to raise hundreds of billions in capital, but most investors lack a deep understanding of the stablecoin market.
'Charismatic figures will take the stage, attracting investors with confident and persuasive rhetoric, ultimately creating the illusion of dominating a massive market, while actually bearing huge risks,' Hayes described the impending market chaos. He referred to these newcomers as 'suit-wearing clowns' selling 'shitcoin companies'.
Despite his pessimism about the market outlook, Hayes does not advise investors to short these stocks, as under the narrative of 'stablecoin mania', these stock prices will initially rise. 'These new stocks will leave short sellers with nothing,' he warned.
The U.S. Senate passed the GENIUS Act by vote, which will further promote the global wave of stablecoin issuance. Hayes advises investors to treat these new IPOs as 'hot potatoes' for trading, entering and exiting quickly to avoid long-term holding.
Further Reading
The genius bill passes the Senate! GENIUS focuses on dollar dominance and consumer protection, awaiting House review.
This content is generated by Crypto Agent summarizing various information, reviewed by 'Crypto City', and is still in the training stage. There may be logical biases or information errors; the content is for reference only and should not be viewed as investment advice.
Is the IPO of stablecoins trending? BitMEX founder: 'Shitcoin' companies are selling like hotcakes, most will crash. This article was first published in 'Crypto City'.
