The recent heated discussion in the crypto space about the Circle IPO event is because it is a super hotspot in the mainstream financial sector and is the behind-the-scenes company of USDC, so it inevitably attracts attention.
Some KOLs believe that this IPO is similar to Coinbase's listing event in 2021, where all the good news has been fully priced in, leading to negative outcomes.
Seeing an IPO makes one think of a crash, which inevitably has the flavor of being overly cautious. This is not to say that July won't bear bearish trends, given that the Federal Reserve has no plans to cut rates in the third quarter. However, the CIRCLE IPO cannot be compared to the positive sentiment around Coinbase; it was Wall Street's first acceptance of the crypto space, and that positive sentiment, set against a historical price peak, indeed led to deceiving retail investors into getting slaughtered—essentially, it was a case of good news turning sour.
The CIRCLE IPO clearly cannot attract crypto investors' attention in the same way, nor can it serve to lure retail investors into taking over; its appeal is not as strong as Trump's Bitcoin bill or Bitcoin ETF. It is even less significant than the recent symbolic act of Singapore driving away crypto people—through policy intimidation discouraging new retail investors from chasing and taking over, especially if Bitcoin peaks again.
When CIRCLE submitted its IPO application to the SEC, the valuation figure in this document exceeded $6.9 billion. Its more important role is to make us further recognize that the US is steadfastly executing the 'Swordfish Operation' to dismantle dollar hegemony, a terrifying act of 'digging its own grave'; all major economic actions are driven by ideological changes. Since World War II, the pendulum of the entire world has swung left, and now it is starting to swing right. This is crucial for financial practitioners. We all know that trading should follow the trend, and when the trend of human civilization shifts, it is far more important than whether Bitcoin is bullish or bearish in the 'small trend.'
This article gives you a pair of wise eyes to see the undercurrents of the world's civilizational shift and make the most important decision for crypto practitioners in the next decade—invest only in Bitcoin, cash is king!
Hello, this is Blockchain Thinking.
I. The Self-Destruction of Dollar Hegemony: The Critical Moment When Hegemonic Costs Exceed Benefits
After Trump took office, few people in the crypto space liked his chaotic actions. Last night, Musk angrily criticized Trump, essentially acting as our mouthpiece; this could be discussed further in a separate album.
But if we calm down and think deeply, why can he act with impunity in a democratic country? Presidential system? That could be one reason, but neither the House nor the Senate, nor the recent American judiciary can control Trump's bratty behavior.
Tell me why? Why!?
Trump is a bastard, but he can hijack the world's number one power because this country is willing to be hijacked by him. His chaotic behavior means that the results of that chaos are accepted by the majority of Americans, except for the rednecks, even the deep state.
Because the American ideology is shifting, from left to right, from inclusive democratic openness to bastard dictatorship isolationism, from globalization to self-indulgence, from low interest rates to high interest rates, from dollar hegemony to the end of dollar hegemony.
Isn't dollar hegemony beneficial to the United States?
The current issue is that the disadvantages outweigh the benefits. Maintaining dollar hegemony makes it very difficult for Americans.
Starting from the original contract established when the Bretton Woods system was founded in 1944. The premise for granting the dollar the status of 'world currency' was the US commitment to maintain gold convertibility and global economic leadership. However, when Nixon unilaterally terminated the gold standard in 1971, the dollar effectively became a credit currency maintained by military hegemony and energy pricing power. This transformation sowed the seeds of today's crisis.
The monetary backlash from the collapse of the real economy
The proportion of US manufacturing in GDP has declined from 28.3% in 1953 to 10.9% in 2023, inversely correlating with the degree of dollar internationalization.
This shift from real to virtual creates a dual dilemma: on one hand, industrial outflow undermines the value anchoring of the dollar's credibility; on the other hand, financial capital continuously pushes for debt monetization to maintain excess returns.
Federal Reserve data shows that non-financial corporate debt as a percentage of GDP has risen from 45% in 1980 to 78% in 2023, revealing the depth of capital turnover.
This point is probably not unfamiliar to us. But as Chinese, we may not know that the foundation of the United States is not wealth from financial capital, but wealth from labor as preached by the Puritans. Although Trump is not free from financial corruption, Americans elect him because, overall, he is returning the voice to industry and workers.
The political cost of the rupture of the social contract
The polarization of wealth distribution, with 1% of the population holding 40% of wealth, resonates with the imbalance in the distribution of seigniorage from the dollar. While Wall Street acquires cheap capital through quantitative easing, industrial workers in the rust belt bear the cost of stagnant real wages for 40 years. This structural contradiction manifests politically as the Trump phenomenon—his proposed tariff barriers and policies for manufacturing return are essentially attempts to correct the over-financialization of dollar hegemony. Although Trump is unlikely to succeed, the division in American society lays the foundation for Trump to act as he pleases—the economic base of rich-poor differentiation determines the superstructure of redneck rightists and wealthy white leftists—screw the childless cat ladies, world peace, I just want to make money and raise kids.
The fiscal deadlock due to debt expansion
The critical point at which US debt exceeds $36 trillion marks the countdown to the 'Minsky moment' for the dollar system. According to estimates from the Congressional Budget Office, by 2033, net interest expenditure will account for 34% of federal revenue, meaning that for every $3 in taxes collected, $1 will go towards servicing debt costs.
When debt growth relies on the expansion of the Federal Reserve's balance sheet, the dollar's status as an international reserve currency ironically becomes a disruptor of fiscal discipline. Aside from increasing tariffs in a desperate attempt to raise funds to fill the hole, the much-maligned Inflation Reduction Act is further delaying America's decline.
The cost-benefit reversal of maintaining dollar hegemony
Maintaining an average annual expenditure of over $80 billion for 153 overseas military bases translates to a burden of $250 per American taxpayer. This 'military-currency' hybrid hegemony model can still sustain cost transfer under a unipolar structure, but as the trend of multipolarity strengthens, its marginal benefits have significantly declined.
The decision of the Trump administration to withdraw troops from Afghanistan reflects the conservative forces' reevaluation of the costs of hegemony, and the withdrawal from the Russia-Ukraine war further makes WANWAN feel betrayed.
Various factors have turned the entire country of the United States into a unreasonable 'bastard,' necessitating a bastard to lead, to re-engage with the founding principles of America, inevitably abandoning dollar hegemony and low interest rates, as low interest rates mean further widening the wealth gap. Don't be fooled by Trump's constant calls for low interest rates; that is just a short-term remedy for the US debt issue, but essentially, the right-wing isolationist ideology will inevitably accompany a high-interest-rate era.
If you think I'm talking nonsense, please tell me why the DXY dollar index, which has remained strong for so many years, has crashed since this year? The timing aligns with Trump's rise to power. Because Trump came with a mission to intentionally weaken the dollar, thereby dismantling the traditional financial forces within the United States.
II. Stablecoins: Parasites or Evolving Forms of the Dollar System?
Abandoning dollar hegemony, stablecoins now serve as a good technological tool. As the dollar weakens, the Plaza Accord is hard to sign again, and other countries are not fools.
A more direct method is to maintain the original supply while reducing usage scenarios, and stablecoins are supported not only in emerging countries; if they gain traction in the United States, even domestic scenarios using US dollars will significantly decrease, while USDC, which is dollar-pegged, is the perfect alternative dollar.
Offshore Dollar 2.0: Currency Alternatives in the Algorithm Age
The essence of compliant stablecoins like USDC is to reconstruct the euro-dollar market using blockchain technology. Its operational mechanism perfectly replicates the core characteristics of London's offshore dollar market in the 1960s: using dollars for pricing but escaping US domestic regulation. By 2024, the daily settlement volume of stablecoins will reach $20 billion, totaling $6 trillion annually, surpassing traditional payment giants like PayPal, marking a substantial replacement of the SWIFT system by private currency networks.
The secret market makers of US debt
CIRCLE's reserve management strategy exposes the deep binding of stablecoins to sovereign credit. Its allocation of 80% of assets to 1-3 month US treasuries essentially makes it a structural buyer in the short-term US treasury market.
When this type of "algorithmic market maker" holds US debt exceeding $500 billion (currently about $150 billion), their buying and selling operations will directly affect the shape of the yield curve, creating a new type of disruption to the transmission mechanism of monetary policy, whose headquarters is the Federal Reserve, which Trump is not happy with. This paradox of "using dollar technology to subvert the dollar system" is reshaping the distribution of monetary power.
CIRCLE's IPO: The institutional game between the old order and new forces
As the first compliant stablecoin issuer to enter traditional capital markets, CIRCLE's IPO day saw a surge of 168.48%, with a transaction volume of $3.941 billion. However, this raised a paradox of institutionalization in crypto assets; what is the underlying logic?
To meet SEC audit requirements, CIRCLE must publicly disclose all reserve wallet addresses and adopt GAAP accounting standards, which fundamentally conflicts with its proclaimed 'decentralized' philosophy. This compromise reveals the realistic dilemmas of the crypto revolution: to gain mainstream financial acceptance, one must partially abandon disruptive characteristics, which will also be the logic that multiple crypto projects will follow in future IPOs; the technological revolution is ultimately tamed by the system. However, from another perspective, why should the 'grassroots' be allowed to enter the mainstream? There will surely be many opposing voices from the old forces, as there is a strong backing in the US that seeks to pull these crypto projects into the mainstream, supporting them on one hand while requiring them to conform on the other, which further demonstrates the determination to move away from dollar hegemony.
Thus, we can summarize:
First, Trump's chaotic behavior reflects a fundamental characteristic of his personality, but this is determined by the trend of American public ideology shifting rightward, leaning towards isolationism. Since the United States is the world's number one power, it will also influence the direction of civilization for decades to come.
Second, to address contemporary American challenges, raising tariffs, weakening the dollar, and promoting the return of manufacturing are undoubtedly practices of the Mar-a-Lago agreement's vision. It seems that only in this way can America have enough manufacturing to export and achieve a trade surplus to generate substantial income to fill the enormous holes in US debt. Of course, how much personal interest this chaotic character Trump mixes in, whether he possesses sufficient strategic acumen, and whether he can execute without being impeached midway, remains to be seen.
Thirdly, since the focus of the state has shifted from finance to rednecks, high interest rates are the trend, because only high interest rates can reduce the plunder of financial practitioners over workers. Low interest rates are a carnival for risk investors, which is why Buffett left the financial market with $350 billion, even as the SPX continues to hit new highs.
Fourth, Trump's crypto governance has both personal interests and the attempt to tie new assets to his own belt. Gold, let's not even mention Trump; the US can't control it either. However, to achieve a trade surplus, the US has also abandoned the dollar, but what about digital gold, Bitcoin? This is the core asset for the future of the world. If Trump farts, decentralized Bitcoin will jump around; Trump, who loves the spotlight, is undoubtedly pleased, at least in the short term, America will have absolute discourse power over Bitcoin.
Fifth, dollar depreciation and high interest rates mean that what must financial practitioners do? They must shift from pursuing risk to seeking safety!
III. Bitcoin: Seeking Value Coordinates Amid Institutional Change
The market volatility triggered by CIRCLE's IPO is akin to a probe into the crypto ecosystem, detecting changes in Bitcoin's value positioning as 'digital gold.'
Distortion of short-term pricing mechanisms
The speculative frenzy caused by the IPO has led to the continuous rise of Bitcoin and the Nasdaq index. This phenomenon exposes the immaturity of the crypto market: it seems that when institutional funds flood in, Bitcoin is transitioning from an 'anti-inflation asset' to a 'risk asset.' This ambiguous positioning may exacerbate short-term price fluctuations but also expands its liquidity base; however, when the inflow of funds is larger and Bitcoin's market value is significant enough, Bitcoin will inevitably revert to being a safe-haven asset and will become the most easily liquidated asset globally.
Long-term infrastructure value reassessment
As stablecoins become the main channel for fiat currency inflows and outflows, Bitcoin gradually exhibits characteristics of a 'settlement layer asset.' By 2024, the value of stablecoins transferred through the Bitcoin network will reach $4.3 trillion, which is 27 times its on-chain native transaction volume. This ecological structure of 'settlement network + application layer tokens' bears structural similarities to the relationship between the TCP/IP protocol and HTTP applications, hinting at deeper supporting logic of value.
The current global monetary system is in a transitional state of 'the old order has not died, and the new system has not yet been established.' The decline of dollar hegemony is not a linear process but a dual movement of extending power and technological transformation through innovations like stablecoins. Of course, stablecoins are merely a means of weakening the dollar and do not hold decisive significance. The transfer of monetary power is never the product of a technological race but rather a reflection of political and economic comprehensive strength.
While Wall Street traders are still fretting over the ups and downs, the rebirth of the abandoned steel mill in Pittsburgh is becoming the center of the world stage. Financial practitioners need to give up their fantasies and prepare for winter.
How to survive the winter?
The answer is clear: hold safe-haven assets like gold and Bitcoin, and cash is king.
As for the imitation season? After this ticket, let's withdraw.