BitMEX founder Arthur Hayes has issued a stark warning about a looming surge of stablecoin companies aiming to replicate Circle’s successful public debut, cautioning that most are likely to fail.
In a post published Monday, Hayes said Circle’s IPO marks the start of what he called a “stablecoin mania,” suggesting that upcoming public offerings in the space will be overhyped and ultimately unsustainable.
“This listing marks the beginning, not the end of this cycle’s stablecoin mania,” Hayes wrote. He predicted that the bubble will eventually burst after a flashy stablecoin issuer uses “financial engineering, leverage, and amazing showmanship” to siphon off billions from investors.
He expects the next wave of IPOs to be “Circle copycats” and offered blunt advice to investors: “Trade this shit like you would a hot potato.”
Hayes cautions against shorting
However, Hayes advised against shorting these stocks, warning that strong pro-crypto sentiment in the U.S. and the prevailing “stablecoin mania” narrative are likely to push prices higher in the short term.
“These new stocks will rip the faces off of shorts,” he warned.
Adding to the momentum, the U.S. Senate is set to vote on key stablecoin legislation on June 17—a development that could further amplify investor enthusiasm if passed.
“Stablecoin regulation in the U.S. will trigger a wave of new stablecoins both domestically and globally,” echoed Chainlink co-founder Sergey Nazarov on Tuesday.
New stablecoins face slim odds of success
Hayes argued that the key challenge for any stablecoin issuer lies in distribution. He pointed to just three viable channels: crypto exchanges, Web2 social media platforms, and traditional banks.
Without access to one of these, he said, new stablecoin projects stand “no chance of success.”
According to Hayes, most upcoming public stablecoin firms will be overvalued and destined to fail. He explained that dominant players already control distribution, while newcomers will face steep costs—either paying high fees to exchanges or offering generous yields to attract depositors. Meanwhile, banks and social media giants are likely to launch their own competing stablecoins.
“For those of us who have been in the trenches for some time it will be hilarious to watch the suited-up clowns that are able to hoodwink the investing public into investing in their dogshit companies.”
Circle (CRCL) is trading at an inflated valuation
Hayes believes Circle (CRCL) is “insanely overvalued” at this point, noting that it gives away 50% of its interest income to Coinbase. Despite this, he expects the stock’s price to “continue levitating.”
Circle completed a successful IPO on June 5, with shares rallying by the end of the first trading day.
Since going public, CRCL has surged over 80%, reaching an all-time high of just under $165 on June 16, according to Google Finance.
