Recently, the stablecoin bill passed in the U.S. Senate, and it is only a matter of time before it is signed by the 'understanding king.' The stock of Circle, the issuer of USDC, continues to rise. Many investors in U.S. stocks have either sold at a loss or missed out; the stock price has already surpassed the $200 mark. If you don't count the IPO cost, it has risen more than three times from its opening price of $64.
On the day after the GENIUS bill was passed, there was a significant reaction in the market for financial-related stocks. Besides Circle's stock price surging, USDC's main distributor, Coinbase, rose over 16%. Visa, Mastercard, and PayPal fell by 3-5%, with Visa alone losing over $30 billion in market value. Coupled with Buffett previously dumping bank stocks, this reflects investors' re-pricing of the 'currency infrastructure' framework for the future. Circle and Coinbase are seen as the 'new core,' while traditional payment giants are officially recognized as products of the web2 old-money era.
Sister Bei has believed from the very beginning that the passage of the stablecoin bill is a significant and long-term positive, with far-reaching effects, akin to a financial nuclear bomb that will disrupt the order and pattern of the traditional financial industry. Circle is the most typical representative and may even become the next Nvidia, as the annual profit margin of Tether's issuer is 50 times that of Nvidia!
If you had an Nvidia stock in front of you ten years ago, would you cherish it? You probably wouldn't see it, and even if you did, you wouldn't hold it for that long. Just like a few months ago when US stocks had a significant adjustment, everyone was saying that the US was about to collapse, the country’s fortune was going to be ruined by the 'understanding king,' and Nvidia was going to take advantage of retail investors, claiming it was overvalued—were you scared? If you were making ten times your investment, wouldn't you be scared? You would definitely sell to lock in profits—yet now, it is again close to a new high, and the Nasdaq is also nearing a new high.
So you're actually quite close to becoming rich, just three conditions away: 1. Find the next Nvidia; 2. Put your money in; 3. Lock it in for ten years.
So how can you find the next Nvidia? This target must meet the following conditions: 1. The current price is low enough; 2. The industry itself has not yet taken off; 3. The business has huge uncertainty potential and imagination space; 4. There is a possibility of becoming the absolute leader in the industry.
So why do we say Circle has this potential? Let's evaluate one by one. First is the price; price is very subjective. When Circle was first issued, everyone said it was too expensive to buy. Because expensive and cheap are not something you can see right now—can you tell if it's expensive or cheap in just one day? Five or ten years later, when it enters a relatively stable business range, you can only reflect back then to determine if the current price is expensive or cheap.
So, I don't know if Circle's price is cheap or expensive, just like if you traveled back ten years, you wouldn't know if Nvidia and Bitcoin were considered expensive or cheap at that time. I only know that its price 'might be low enough' simply because it has just been released, and it needs to go through a long price discovery process.
Some say the price-to-earnings ratio is too high, can you not joke about it? You can't use Buffett and Munger's methods for evaluating consumer stocks to assess high-growth industries; that itself is not a system—one is in a mature system. For example, if you see Coca-Cola sold this much last year, it is unlikely to decline sharply or rise significantly next year, so you can determine if the current price is expensive or cheap. The other is in a highly uncertain system; you say the P/E ratio is too high? Tomorrow, they might get a new business or a new partnership, and the P/E ratio could drop immediately. What follows? The price will definitely skyrocket, pushing the P/E ratio up again. Similarly, if you reverse engineer Nvidia from back then, it would certainly have been continuously overvalued, and then it desperately developed, one good news after another, quickly filling in the high P/E gap, then continuing to skyrocket and be further overvalued.
Next is the industry. Real World Assets (RWA) is imperative, and stablecoins are basically determined to be the entry point for the RWA industry, serving as a bridge connecting the blockchain to the real world—once the two worlds merge, where will the highest-valued assets often be? The bridge, because it is a necessity, can stabilize the collection of 'toll fees.' Investing in stablecoins is essentially investing in a certain future; it's just a matter of whether that future comes tomorrow, next year, or five years later.
Then there is imagination. If you buy Mixue Ice City or Bank of China, you are basically saving your money because their businesses are just there. Mixue Ice City cannot open ten times more stores, and Bank of China cannot increase its business volume tenfold—these are stable, but if you want to become rich by buying them, that's unlikely. But companies like Tesla, Xiaomi, Nvidia, or future companies like Circle are different. They may not be as stable, but they have strong explosive power; you never know when they will suddenly replace all the drivers on the road, fill your home with robots, or become the global settlement center—this is called imagination. Imagination may not necessarily become reality, but it has explosive potential; it’s the difference between 'possible' and 'impossible.'
Finally, there is the potential to become the absolute leader. Ten years ago, Nvidia was still in fierce competition with AMD, but today the gap is obvious. Often, investors' profits are realized slowly as they bet on a particular asset becoming a leader. So what was the best strategy back then? Half buying Nvidia and half buying AMD—translated to today, it would be half buying Circle stocks and the other half buying Tether's stocks. Unfortunately, you can't buy Tether's stocks; otherwise, the likelihood of you becoming rich in ten years would have been significantly higher.
It is still uncertain whether the current stock price of Circle is undervalued or overvalued, but what is known is that this is a good business. As long as you bet on a few future pathways that are almost certain to shine, there is a high probability that at least one will grow into today’s Nvidia.
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