On June 5, @Circle will be listed on the New York Stock Exchange under the ticker CRCL, marking the most anticipated IPO since Coinbase ($COIN) in 2021.
In this IPO, Circle plans to issue 24 million shares, raising $624 million, with a target valuation of $6.7 billion. (Latest valuation adjusted to $7.2 billion)
According to reports, Cathie Wood's ARK fund will subscribe to $150 million, and Larry Fink (CEO of BlackRock) will invest another $60 million, which together accounts for about 35% of this financing.
Bloomberg reports that this financing has been oversubscribed.
Wood and Fink can be seen as KOLs in traditional finance, and they are likely to promote the 'stablecoin narrative' between institutions and retail through media exposure.
People in the crypto space often criticize Circle for its high operating costs (thanks to @TheOneandOmsy) and point out that it has 'leaked' a lot of value to Coinbase.
But the reality is that Circle's stock may be one of the few ways to bet on the growth of stablecoins and blockchain technology.
Given that this is a conventional IPO rather than a direct listing, insiders cannot sell their shares within the first 180 days. If the subscription has indeed been oversubscribed as reported, it is very likely that CRCL will perform well after its listing.
For people in the crypto space, it can be seen as a token launch with a 'low circulation + high full valuation', backed by traditional finance heavyweights (Wood, Fink).
We are in a period where tech IPOs are performing very well, so I tend to disagree with the pessimistic sentiment towards CRCL in the market. USDC is currently the second-largest stablecoin by market value, with strong distribution channels, and the high operational cost issue can be optimized. The GENIUS Act is also about to be implemented.
If we look at the average 'issue price to current price' increase of 54.7% for tech stock IPOs, $CRCL is expected to break through a market value of $10 billion shortly after listing with a valuation of $6.7 billion.
The key question is, how significant will this be for DeFi and the entire crypto market?
Is the summer of stablecoins about to arrive?
$CRCL's trading performance will greatly impact the valuation trends of DeFi assets. After all, if CRCL's market value is similar to ENA, how can we justify ENA having a $5 billion FDV?
If CRCL quickly breaks through a market value of $10 billion, projects closely related to stablecoins with real cash flow may also see their valuations rise rapidly.
For example: If Circle has a net profit of $157 million in 2024 and a market value of $10 billion, then MKR (restructured to SKY) earning $107 million at its current $1.4 billion valuation seems much more attractive.
Of course, this comparison method is not perfect, but the core idea is: If TradFi is willing to pay for CRCL, its 'valuation anchor' effect is likely to impact the entire DeFi ecosystem.
Perhaps, the summer of stablecoins is about to begin?
Trading opportunities
I believe CRCL's IPO provides a good trading opportunity for DeFi:
Positive beta assets: issuers of stablecoins like MKR and ENA directly benefit;
Marginal beneficiary targets: related ecosystem projects such as $PENDLE, $SYRUP, and $AAVE also have logic;
Derivative effects: If these coins start to take off, contract/spot DEX will also see more on-chain activity.
Additionally, I personally believe that CRCL itself is a good investment target.
Of course, some are concerned that this IPO is a 'top signal'—after all, Coinbase's last IPO coincided with Bitcoin peaking on April 14, 2021. But I believe the market is not as 'bubbly' this time:
Back in 2021, BTC's market share (BTC.D) was collapsing, while now, altcoins have already been 'hammered down', and market sentiment is calmer.
In summary: This time is different, maybe the summer of stablecoins is really coming.
Another important distinction is: $COIN went public via a direct listing, which means retail investors were basically buying into 'exit liquidity' for insiders.
However, CRCL is a conventional IPO, with a 180-day lock-up period for insiders, making it less likely to encounter this issue.
To summarize:
I believe CRCL will perform very well after going public. It may be one of the best targets for betting on the development of stablecoins and the growth of blockchain technology.
Buying Circle stock is itself a trading opportunity. But I also believe it could trigger a small-scale DeFi season, as CRCL's valuation may 'raise the ceiling', allowing for a reevaluation of quality DeFi projects.
If I'm wrong and the stock price of $CRCL is below the issue price after its listing, then this trade can be considered a clear failure, and I can cut losses directly.
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