'Circle's stock price soared to $47 billion, which is probably the most desolate episode for crypto insiders.'
This statement accurately captures the dramatic scene in the recent market. When many 'insiders' deeply rooted in the industry miss out or sell too early, some 'outsiders' who decisively bought after listening to podcasts end up reaping huge rewards. This sense of misalignment raises the question: How can a company that issues stablecoins have a valuation that matches the amount of currency it issues?
Is there an incomprehensible bubble behind this, or is it a new logic we have yet to understand? Is this madness an exception in the capital market? Today, let us unravel Circle's valuation myth layer by layer and take a glimpse into this fantastical world of 'crypto stocks'.
First, uncovering Circle: How did the 'printing press' become a 'money printer'?
Many people misunderstand Circle's business model, thinking it only issues USDC pegged 1:1 to the dollar with slim profits. But in reality, it is a fintech giant with a strong moat and vast imagination.
First of all, it is a 'bank for guaranteed interest'.
Circle does not simply lock hundreds of billions of dollars in a vault, but invests these reserves in highly liquid, high-credit assets like U.S. Treasury bonds. This means that every interest rate hike by the Federal Reserve effectively adds to Circle's profits. This stable and substantial interest income is its most solid profit foundation.
Secondly, compliance is its deepest 'moat'.
The mention of the [New York State BitLicense] in the interview is key to understanding this. This license, of which there are only about 20 in the world, may not yield much business volume, but it serves as a 'top-tier VIP card' to show off to regulators and partners worldwide. When Circle presents this license to the Monetary Authority of Singapore or the European Central Bank, it is equivalent to saying: 'I have passed the hardest exam, your rules are child's play for me, right?' This is a credibility endorsement that its competitor Tether finds hard to match.
Finally, it holds the 'two-stage rocket' for the future.
First-stage rocket (now): Becoming challengers to Visa and Mastercard. In the trillion-dollar markets of cross-border payments, international trade, and large commodity settlements, stablecoins are demonstrating tremendous potential for substitution due to their efficiency and low cost.
Second-stage rocket (future): Becoming the underlying settlement tool in the era of 'everything on-chain'. When the U.S. SEC finally gives the green light for security token offerings (STO), stocks, bonds, and real estate can circulate on-chain in tokenized form. At that time, USDC, as the on-chain dollar, will see exponential demand. The scale of the stablecoin market will be several times today's size and may even challenge Michael Saylor's prediction of $10 trillion.
Second, madness is not limited to one company; welcome to the fantastical world of 'crypto stocks'.
If you think Circle's valuation is already crazy enough, then looking at the entire 'crypto stock' universe, you will find it even appears somewhat 'delicate'.
The purest gambler: MicroStrategy ($MSTR)
A company primarily engaged in commercial software, under the leadership of founder Michael Saylor, transformed itself into a 'Bitcoin leveraged ETF'. It continuously increases its Bitcoin holdings by issuing bonds and financing, causing its stock price to fluctuate far more than Bitcoin itself. This is the true 'All in', a gamble binding the company's fate to a single asset.
The thermometer of the market: Coinbase ($COIN)
Its stock price serves as a 'barometer' for the entire crypto bull and bear cycle. When a bull market arrives, trading volume surges, and stock prices soar; when a bear market hits, user loss occurs, and stock prices plummet. Even crazier, it recently offered as high as [12% annualized interest rate] to attract USDC deposits, collaborating with Circle to 'burn money for market share'. This cost-ignoring expansion strategy would leave any traditional financial analyst dumbfounded.
Amplifier of the cycle: Mining stocks (e.g., $MARA, $RIOT)
Their business is straightforward—mining Bitcoin. Stock prices are tied not only to coin prices but also entangled with electricity costs, mining efficiency, mining difficulty, and other variables, amplifying volatility to the extreme. In a bull market, they are among the assets with the most significant gains; however, in a bear market, they are also the most likely to go bankrupt.
Third, after missing out, what should we consider?
We don't have to regret missing out on Circle; understanding the logic behind it is far more important than seizing a single opportunity.
The narrative has shifted: Fund flows determine market hotspots.
As experts say: 'Current liquidity and wealth effects are clearly concentrated in the stock market.' Because a compliant stock market can accommodate far more capital than the crypto circle. The story of Web3 is being told to Wall Street through the form of 'crypto stocks'.
Where are the future opportunities?
Understanding the importance of 'soft power': The story of Tether tells us that in an emerging industry, 'having money and political resources is a hard truth'. Future competition will not only be about technology and compliance but also about the competition of capital and power. Even as new players like [offshore RMB stablecoins] enter the scene, the competitive landscape will become even more complex.
Grasping the cycle rotation: The current hotspot is 'crypto stocks', but when the macro environment changes (for example, the Fed enters a rate-cutting cycle), funds may flow back out of the stock market into the riskier, more elastic 'altcoin' market. Understanding the flow path of capital is key to keeping pace.
Look for the next 'Circle': Actively pay attention to traditional listed companies that are embracing Web3 technology and have the potential to lower costs and create new income through it. They might just be the next sparks ignited by capital.
Conclusion
Circle's surge is not the end, but a clear signal. It marks the unprecedented blurring of boundaries between the crypto world and traditional finance. For those of us in it, instead of feeling frustrated about missing the bus, it is better to see the roadmap ahead, because the next train named 'madness' may arrive soon.