BitMEX co-founder Arthur Hayes has issued a warning about the risks associated with the rise of stablecoins following Circle's successful IPO.
Hayes' Warning
Arthur Hayes expressed skepticism about the future of stablecoins after Circle's successful stock market debut. He predicts that a phase of 'stablecoin mania' is arriving, which could lead to widespread failures and financial losses. According to him, Circle’s IPO could signal an influx of interest in new stablecoins.
New Entrants in the Stablecoin Market
Hayes argues that many new stablecoin companies will not survive. He outlined three main distribution avenues: cryptocurrency exchanges, social media giants, and traditional banks. Without access to at least one of these channels, a new stablecoin issuer has little chance of success.
Critique of Circle's Valuation
Hayes criticized Circle's current valuation, deeming it significantly overvalued. He pointed out that the company shares 50% of its interest earnings with Coinbase, which he sees as a structural weakness. Nevertheless, he recognized that the stock price may remain high due to market hype.
Arthur Hayes' warnings highlight the risks associated with the rise of stablecoins and raise questions about the true value of new issuers in the financial markets.
