In June 2023, Circle, known for its issuance of the USDC stablecoin, went public, igniting significant interest in cryptocurrencies and IPOs within this sector.
Reasons for Circle's Success and Its Market Impact
Circle went public on June 5, experiencing a staggering 595% increase in its stock price, which heightened investor interest in stablecoins. Circle's CEO, Jeremy Allaire, emphasized the importance of stable currencies, asserting that they may represent "the most useful form of money." His remarks highlight that the anticipated "iPhone moment" for digital dollars is approaching.
On June 19, the U.S. Senate passed the GENIUS Act, classifying stablecoins as "digital cash." This legislation further propelled Circle's stock by an additional 30% in a single day.
New IPOs in the Crypto Space
With Circle's successful market debut, 13 crypto-related firms have publicly confirmed their IPO plans. Major players such as Gemini and Kraken are on the list. Firms from mining to custody and Web3 investment funds are eager to go public, with many companies choosing the U.S. market for better liquidity and clearer regulatory conditions.
Cautions for Investors in Crypto IPOs
Despite the wave of interest, experts caution that not every IPO will match Circle's success. Soon after Circle's IPO, investment firm Ark Invest sold nearly $100 million worth of shares. This raises questions about whether investing in crypto IPOs is prudent, as many firms may not justify high valuations. BitMEX co-founder Arthur Hayes warned that the current IPO craze could resemble the ICO mania of 2017, where exuberance was followed by sharp drops in value.
Circle's IPO signifies the maturation of the cryptocurrency sector and signals changes in U.S. regulatory policy. However, investors should exercise caution, considering risks and basing decisions on facts rather than market euphoria.
