BitMEX co-founder Arthur Hayes has expressed concerns over the emerging trend of stablecoin IPOs, urging caution. In a recent blog, he likened these offerings to a 'hot potato', advocating for a short-term investment strategy.
What is 'Stablecoin Mania'?
Hayes notes that the listing of Circle on the NYSE marked the beginning of what he terms 'stablecoin mania'. He believes this phase will be driven more by hype than by fundamentals. While the excitement may spur a short-term rally, he is convinced that many of these IPOs will eventually crash hard once the buzz fades.
The Market and Its Pitfalls
Hayes makes it clear that if a stablecoin project lacks solid distribution, it is unlikely to survive. He identifies three main pipelines: centralized crypto exchanges, large Web2 platforms, and traditional banks. However, these routes are already occupied by giants like Coinbase. Hayes anticipates a wave of banks and tech firms launching their own stablecoins, making it increasingly difficult for smaller projects to compete.
Circle: A Warning Sign of Overvaluation
Hayes pointed to Circle (CRCL) as a prime example. He did not mince words, calling it 'insanely overvalued', but acknowledged that its tight partnership with Coinbase is what keeps it afloat. Since its NYSE debut on June 5, Circle's stock has surged over 80%, but Hayes warns that many investors may not realize how shaky these business models are once analyzed deeply.
Hayes concludes that the overcrowded IPO space for stablecoins poses risks and uncertainties for investors. Despite potential short-term gains, he warns against overconfidence in these stocks, emphasizing that many of them may just be 'dogshit in a fancy suit'.
