Arthur Hayes Predicts Circle’s IPO Will Spark ‘Stablecoin Mania’ Frenzy

Strap in, folks—the stablecoin circus is coming to Wall Street.

BitMEX co-founder Arthur Hayes just dropped a bombshell: Circle’s impending IPO could light the fuse on a speculative bubble that’ll make the 2021 memecoin craze look tame. Here’s why the suits are sweating.

The Domino Effect Nobody’s Talking About

When the first regulated stablecoin issuer hits the public markets, it won’t just be a liquidity event—it’ll be a flashing neon sign for every VC chasing the next Tether. Expect a stampede of ‘stable adjacent’ startups suddenly discovering their ‘path to profitability’ (spoiler: it involves printing tokens).

Institutional FOMO Meets Crypto’s Favorite Trojan Horse

Pension funds still pretending to hate crypto will suddenly develop a strange fascination with ‘yield-bearing dollar equivalents’—just in time for Circle to roll out their 47th product pivot. How convenient.

The kicker? This all happens while real yields are getting crushed by the Fed’s latest policy flip-flop. Nothing like chasing 4% returns in a 6% inflation world—but hey, at least it’s ‘stable’ right?

The Distribution Imperative

In the June 17 piece, the crypto entrepreneur called Circle’s public listing, which raked in more than $1.1 billion, “grossly overvalued.” He also claimed that it signaled the beginning of a speculative frenzy destined to end in significant losses.

“The bubble will pop after the launch of a stablecoin issuer on a public market, most likely in the U.S., that separates fools from tens of billions of capital by using a combination of financial engineering, leverage, and amazing showmanship,” Hayes predicted.

He hinged his thesis on one crucial factor for any stablecoin’s survival: distribution at scale.

“The only question you must ask yourself when evaluating an investment in a stablecoin issuer is this: how will they distribute their product?” the market watcher asserted.

According to him, legacy financial institutions and large crypto exchanges such as Coinbase have effectively monopolized viable distribution channels. For this reason, he feels new entrants will face near-insurmountable barriers in their bid to replicate the successes of incumbents like Tether (USDT).

The 40-year-old believes social media giants like Meta and traditional banks are facing an “Extinction Level Event” from efficient stablecoins, which will inevitably build proprietary solutions, shutting out third-party partnerships.

He pointed to Tether’s staggering profitability, earned via the spread on U.S. Treasury holdings, as the irresistible lure driving the coming wave of overvalued IPOs, despite the closed distribution landscape.

“The stablecoin narrative is unique in that it has the largest most obvious TAM for a TradFi muppet,” the crypto enthusiast wrote, acknowledging the allure but predicting a “road to destruction” for those who will invest in new stablecoin issuers lacking Tether’s network effects or Circle’s connection with Coinbase.

Booming Stablecoin Market

Hayes’ warning comes against a backdrop of undeniable sector momentum. According to CryptoQuant, the stablecoin market cap has ballooned 17% year-to-date (YTD), adding $33 billion to hit $228 billion.

USDT added slightly more than 13% to its market cap in that period, pushing it past $155 billion. Meanwhile, USDC seems to have finally shaken off the aftereffects of its 2023 depeg crisis following the Silicon Valley Bank collapse, surging 39% to $61 billion.

Liquidity is also flooding exchanges, with ERC-20 stablecoin reserves hitting about $50 billion, and yield-bearing stablecoins recovering to $6.9 billion.