According to former Bitmex founder Arthur Hayes, Circle’s June 5 IPO sparked what he called “Stablecoin Mania.” He warned that this was just the beginning. Many new issuers will rush to make it public. Most of them will not last, he predicted.
The emergence of a stable list of imitators
Hayes noted that Circle’s stock has jumped more than 80% since its listing, reaching less than $165 on June 16, and everyone wants to take action. He expects a wave of “circular imitators” to appear.
These companies will use clever speeches and huge commitments to attract attention. Investors may pile up and raise prices in the first place.
Image: SOPA Images/Getty Images
Treat like hot potatoes
According to Hayes’ colorful advice, traders should handle these stocks like hot potatoes. He said you don’t want to hold them for a long time. Crazy people may raise prices drastically, but once confidence breaks down, everyone will compete to dump stocks, like along something too hot to keep.
Risk and overestimate
Hayes believes that many new listed companies have been overvalued. They will offer high prices to attract depositors or spend a lot of money. At some point, the balance sheet does not add up. That’s when the bubbles burst and the inventory drops.
He also warned against sudden collapse through short circuits. He said that for at least some time, the narratives of the United States and mania remain buoyant.
Distribution channels are locked
Hayes identified only three clear avenues to attract customers: crypto communication, large social media platforms and established banks. If no deal is reached, newcomers will struggle. The exchange will require substantial listing fees.
Social networks may build their own tokens instead of hosting outsiders. Banks can also launch internal stablecoins to reduce new entrants. For anyone else, the chances of success are small.
Source: MacroMicro
Adjust the burning fire
According to the report, the U.S. Senate will vote on the main Stablecoin rules on June 17.
Chainlink co-founder Sergey Nazarov responded to this view on Tuesday, noting that clear rules would encourage more issuers around the world. However, Hayes warned that easier regulations don’t solve the core problem of finding real users.
Circle’s price tag is under review
According to Hayes, the circle itself is not immune. He called its current valuation “crazy,” noting that the company placed half of its interest income on Coinbase for custody services. Still, he believes CRCL’s stock will keep floating until the real market correction.
Featured images from Unsplash, charts for TradingView
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