Arthur Hayes, co-founder of BitMEX exchange, analyzes Circle's IPO in his new essay 'Assume the Position' and warns about the risks associated with the growing stablecoin market.
Issues with Circle IPO and Stablecoins
Hayes argues that Circle's market debut signifies the start of a dangerous wave of stablecoin startups backed by uninformed investors. In his essay, he noted, 'I hope this essay can prevent a rapid expansion of your sphincter.' He warns traders not to succumb to the hype around new stablecoin companies, citing Circle's IPO as a potential catalyst for a bubble that could lead to significant losses.
Tether's Path to Success
Hayes explains that Tether, as a successful stablecoin, addressed a real problem and established its infrastructure through Bitfinex. USDT became the main trading pair during the ICO boom. Its emergence allowed traders to move funds quickly between platforms without needing intermediaries.
Future of Stablecoin Startups
Hayes predicts that new stablecoin issuers will attempt to follow Circle's IPO path. However, most will depend on financial engineering and showmanship to attract funds. 'If a stablecoin issuer cannot distribute through a crypto exchange, they have no business,' warns Hayes.
Arthur Hayes emphasizes the need for careful consideration of stablecoin business models and their ability to achieve sustainable growth. The market may face significant challenges if startups cannot ensure reliable infrastructure and distribution.
