Circle’s IPO just shot up like a rocket, and suddenly, everyone’s talking about how stablecoins are going mainstream. But before you rush in with your next trade, Arthur Hayes, yes, the former BitMEX CEO known for bold predictions, is waving a big red flag.
He’s not saying you shouldn’t get in. In fact, he thinks there’s serious money to be made if you play it smart. But like every gold rush, there’s a cliff not far behind the gold. And when that fall comes? Hayes says it’s going to be brutal.
So what’s really going on with this surge in stablecoin stocks, and how can you protect yourself from getting burned? Let’s break it down.
The Rise of Stablecoin Stocks
Circle’s IPO Lights the Fuse
On June 5, Circle, the issuer of the USDC stablecoin, went public, igniting interest across the investment world. Circle’s valuation soared over 80% within days. This signaled what Hayes calls the beginning of a stablecoin stocks boom, drawing attention from traders, crypto enthusiasts, and financial institutions.
“This is a hype cycle in the making,” said Hayes in his essay Assume the Position. “But the climax will be brutal.”
Why the Hype Exists
The growing interest is fueled by:
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Positive regulatory developments in the U.S.
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Public appetite for crypto exposure through stocks
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Record profits from stablecoin issuers like Tether and Circle
The Problem Beneath the Surface
Flimsy Foundations
Hayes warns that most stablecoin stocks are being built on shallow financial models. Companies rushing to go public often lack robust distribution infrastructure, such as access to major exchanges, social platforms, or bank partnerships.
“These firms are run by suited-up clowns who understand finance but not distribution,” Hayes wrote.
The “Hot Potato” Strategy
Despite criticizing the long-term fundamentals, Hayes does not advise shorting stablecoin stocks yet. Instead, he suggests capitalizing on the speculative frenzy by entering and exiting quickly.
“Trade these like a hot potato before the whole thing implodes.”
Winners and Losers: Circle vs. Tether
Circle’s USDC remains a major U.S.-centric player, but Hayes believes it is currently overvalued, especially with Coinbase reportedly taking 50% of interest revenue. In contrast, Tether (USDT) dominates global markets, retains full yields, and has deeper infrastructure integrations.
“Tether is the most profitable bank per employee in the world.”
What Comes Next?
Hayes predicts that as more companies file IPOs, one will inevitably falter. That single event could trigger a confidence collapse in stablecoin stocks, mirroring past crypto busts.
He also suggests the long-term winners will not be today’s issuers but rather Big Tech and legacy banks that can deploy stablecoins directly to their users.
Conclusion
Arthur Hayes’s stark analysis casts a shadow over the short-term euphoria surrounding stablecoin stocks. While current gains may be tempting, investors are advised to stay alert and understand the structural risks underneath. As always in crypto, fortunes rise fast—but can collapse even faster.
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FAQs
1. What are stablecoin stocks?
Stocks of companies that issue stablecoins or derive significant revenue from stablecoin operations.
2. Why is Arthur Hayes skeptical about them?
He believes most lack real infrastructure and are riding a hype wave.
3. Is Circle a good investment?
Short-term, it may perform well. Long-term, Hayes sees it as overvalued.
4. What is the “hot potato” strategy?
Buying during the hype and exiting quickly before the crash.
5. Will Big Tech enter the stablecoin space?
Yes. Hayes believes companies like Meta and banks will dominate the next phase.
Glossary of Key Terms
Stablecoin: A cryptocurrency pegged to a fiat currency (like USD).
IPO (Initial Public Offering): When a private company becomes publicly traded.
USDC: A U.S.-dollar backed stablecoin issued by Circle.
Tether (USDT): The most widely used stablecoin globally.
Distribution Infrastructure: Access to markets, exchanges, social platforms, or banking systems.
