Original title: Circle IPO – Time for Stablecoin Summer?
Original author: @TaikiMaeda 2
Original translation: zhouzhou, BlockBeats
Editors note: Circle will IPO on the New York Stock Exchange under the ticker CRCL, which may trigger the Summer of Stablecoins. The IPO is valued at $7.2 billion, supported by Cathie Wood and Larry Fink, and the market is hot. CRCL is seen as the best target for betting on the growth of stablecoins and blockchain, and is expected to drive a revaluation of DeFi asset valuations.
The following is the original content (for easier reading and understanding, the original content has been reorganized):
On June 5, @Circle will list on the New York Stock Exchange under the ticker symbol CRCL, marking the most anticipated IPO since Coinbase ($COIN) in 2021.
In this IPO, Circle plans to issue 24 million shares, raise $624 million, and target valuation of $6.7 billion. (The latest valuation was adjusted to $7.2 billion)
It is reported that Cathie Woods ARK Fund will subscribe for $150 million and Larry Fink (BlackRock CEO) will invest another $60 million, which together account for approximately 35% of this financing.
Bloomberg reported that the financing was oversubscribed.
Wood and Fink can be regarded as KOLs in the traditional financial world. They are likely to promote the stablecoin narrative among institutions and retail investors through media exposure.
People in crypto circles often criticize Circle for its high operating costs (courtesy @TheOneandOmsy) and point out that it leaks a lot of value to Coinbase.
But the reality is that Circle stock may be one of the few ways to bet on the growth of stablecoins and blockchain technology.
Since this is a conventional IPO and not a direct listing, insiders cannot sell their holdings in the first 180 days. If the subscription is oversubscribed as reported, it is very likely that CRCL will perform well after listing.
For people in the crypto circle, they can view it as a token launch with low circulation + high full valuation, with the support of traditional financial bigwigs (Wood, Fink) behind it.
We are in a period of very impressive performance of technology IPOs, so I tend not to agree with the markets pessimism about CRCL. USDC is currently the second largest stablecoin by market value, with a strong distribution channel, and the problem of high operating costs can be optimized. The GENIUS Act is also about to be implemented.
If we look at the average increase of 54.7% from the issue price to the current price of technology IPOs, $CRCL is expected to exceed a market value of $10 billion in the short term after it goes public with a valuation of $6.7 billion.
The key question is, how big will the impact be on DeFi and the entire crypto market?
Is the summer of stablecoins coming?
The trading performance of $CRCL will greatly affect the valuation trend of DeFi assets. After all, if the market value of CRCL is similar to that of ENA, how can it be justified that ENA has a FDV of $5 billion?
If CRCL soon exceeds the $10 billion market value, the valuations of projects that are closely related to stablecoins and have actual cash flow may also be rapidly raised.
For example: If Circle makes $157 million in net profit in 2024 and has a market cap of $10 billion, then MKR (rebranded as SKY) making $107 million at its current $1.4 billion valuation looks much more attractive.
Of course, this comparison method is not perfect, but the core is: if TradFi is willing to pay for CRCL, its valuation anchor effect is likely to affect the entire DeFi ecosystem.
Perhaps, the summer of stablecoins has begun?
Trading opportunities
I think CRCL’s IPO provides a good trading opportunity for DeFi:
Positive Beta Target: Stablecoin issuers such as MKR and ENA benefit directly;
Marginal beneficiaries: $PENDLE, $SYRUP, $AAVE and other related ecological projects also have logic;
Spin-off effect: If these coins start to take off, contract/spot DEX will also see more on-chain activity.
In addition, I personally think that CRCL itself is a good investment target.
Of course, some people are worried that this IPO is a top signal - after all, the last Coinbase IPO coincided with the peak of Bitcoin on April 14, 2021. But I dont think the market is so bubble this time:
At that time in 2021, BTC’s market share (BTC.D) was collapsing, but now, altcoins as a whole have been “hammered” and market sentiment is calmer.
To sum up in one sentence: this time is different, maybe the summer of stablecoins is really coming.
Another important difference is that $COIN was directly listed that year, which means that when retail investors bought it, they were basically providing exit liquidity to insiders.
However, CRCL is a regular IPO, and insiders have a 180-day lock-up period, so this problem is less likely to occur.
To summarize:
I think CRCL will perform very well after listing. It may be one of the best targets at present to bet on the development of stablecoins and the growth of blockchain technology.
Buying Circle stock is a trading opportunity in itself. But I also think it may also trigger a small-scale DeFi season, because CRCLs valuation may raise the ceiling and allow the valuation of high-quality DeFi projects to gain revaluation space.
If I am wrong and $CRCLs stock price is lower than the issue price after listing, then this transaction will be a clear failure and I can stop the loss directly.
