Circle Internet Group- the company behind USDC went public yesterday. They opened trading around $30 a share and have now skyrocketed to $115 a share.

This equates to over $25B in market cap.

But there are only 60B USDC in circulation. The market is giving them almost 42 cents of value for every USD token they mint. That's absurd.

Let's ignore the inherent risks of asset/liability matching if there is ever a run on the USDC bank and they get a ton of redemptions and have to sell off their treasuries at a loss. The treasury market is not as stable as it used to be which is why stablecoin issuers are only buying short term paper. How long until short term rates are as volatile as long term rates? There is also the issue of the fact that customers are beginning to demand a share in the yield. That would compress their margins.

Now we know from the Tether, stablecoin issuance can be a low overhead, high profit business but Circle is highly regulated and pretty much only used in the US. They don't make anywhere near the kind of money Tether does.

Circle made 285M in profit last year. With an average supply of around 35B of USDC. So one would expect this year's profit will be higher maybe 450M-500M. So the market must be pricing in growth right, but here is the interesting part. The peak supply of USDC in the last cycle was 55B, so despite all the positive regulatory developments USDC supply has only grown by around 9% since the last peak. Meanwhile USDT (tether) supply has grown from 80B to 155B (94%) since the last peak.

Clearly Circle is not the market leader. On top of that they have absolutely no moat. Most of the big banks will issue their own stablecoins in the coming years as stablecoin legislation becomes more friendly.

So being incredibly generous, at best estimates Circle is trading at 50x earnings for a product that is not market leader, has little growth, and can be easily copied by larger players with huge customer bases.

I predict within 6 months Circle will be trading back at or below it's IPO price.

Play fiat games win stupid prizes.

Sats for all, GR