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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
35 sats \ 16 replies \ @freetx 17h
Most notably, the US Treasury Borrowing Advisory Committee (TBAC) released a forecast in April 2025 projecting that the stablecoin market could reach a $2 trillion market cap by 2028, up from approximately $234 billion at the time—a nearly 10x increase
Assuming Circle 10x from here (as well as Tether), then Circle would probably be undervalued....so its quite likely investors are just trying to frontrun.
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Why would they 10x when they have only gone up 9% in 4 years while Tether went up 94%? If the stablecoin market is 2T it is highly likely a lot of the volume is routed through the big banks.
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30 sats \ 14 replies \ @freetx 17h
Why would they 10x
The GENIUS act, if/when it passes is going to give preference to US-based stablecoin operators (which is USDC).
Look I think Tether may 15x and USDC may only 5x....but the point is 2028 is not far away, and even at 5x Circles valuation would not be that bad (a 5x may result in a PE of 2 or so)
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50 sats \ 6 replies \ @optimism 17h
I just remembered: didn't they ban USDT in the EU (on CEXs) in March this year? I'm not sure what the status is of that right now, but if this is still the case, then USDC is the market leader in EU too.
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Hasn't impacted the flows into market caps so far.
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50 sats \ 4 replies \ @optimism 16h
True. I hope that we can agree that for future growth, it's almost always better to not be banned from a market, though?
Why won't the banks create their own stablecoins? You are assuming all that market share goes to USDC. You don't think there will be other issuers. There is no moat to spinning up a token and buying treasuries with the USD you take in.
Also a 5x would increase earnings from 500M (assumed) to 2.5B which would be 10x earnings not 2x.
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55 sats \ 3 replies \ @freetx 16h
Also a 5x would increase earnings from 500M (assumed) to 2.5B which would be 10x earnings not 2x.
You're right. Still in a collapsing fiat system a PE of 25 is considered "normal".
Why won't the banks create their own stablecoins?
I'm sure some will try. The funny thing though is are traditional banks capitalized enough? They cant simply print money, they need actual funds to buy 1:1 Treasuries to back their virtual USD.
The most curious thing (and least talked about, IMO) about GENIUS act is we are moving back to full reserve banking.
I suspect the next shoe to drop is that Tether and USDC will compete for clients by giving them a share of their interest earnings (assuming they are earning ~4.5% on their treasuries).
Therefore, I think the way the game will shape up is USDC or Tether will sign "exclusives" with large retail banks and offer them say 2% for the customers they onboard. The retail banks, being broke, will go for the easy-no-work-free cash.....
The retail banks are basically turning into front-end websites and Tether/USDC will be the actual banks.
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If they start to offer users a share in the yield it becomes a race to zero like brokerage fees and the entire business model becomes about AUM not profit. If they need volume to 5x now they definitely need it to 10x or more if they are sharing the yield. The more treasuries they hold the more risk. They are short term but even small changes in price at such a large market cap could put them at risk of the peg breaking.
20 sats \ 1 reply \ @optimism 16h
Why won't the banks create their own stablecoins?
Risky and outside of core business. They don't have the expertise. It's cheaper and easier to control liabilities when you just take a stake in Circle stock and contract them to do it for ya.
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They could have bought Circle outright if they wanted but now that it is public and massively overvalued it makes more sense to cannibalize their business.
Why have you bought Magnus when he's actually struggling to find a win. Is he winning?
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Because he was either going to win or draw.
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If Gukesh didn't lose after Magnus went for a draw, it would be a heartbreak for you. But now as Gukesh had already lost, noone's gonna surpass king magnus. So, he's now the champ.
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Gukesh had to win outright. He wasn't really in position to do that with so little time. Win probability was pretty decisive towards Magnus once he turned the game on Arjun.
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I was watching Gukesh vs Fabi. Gukesh really came very close to winning it in the end.
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Yes. He had a path to win but he had so little time. Hard for him to find it. It's easy for the commentators using the chess engine to find but when you are up against the clock it is a lot of pressure. Even Magnus was pressed for time. He had a path to win but had to accept the draw because there simply wasn't enough time to play it out.
Very exciting to watch.
40 sats \ 0 replies \ @ch0k1 12h
Of course it is. A classical house of cards which TBH I can't believe how it stayed dry during the Terra crash 🤔
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most probably you are right. we should talk again about this in 6 months.
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118 sats \ 1 reply \ @ek 18h
I predict within 6 months Circle will be trading back at or below it's IPO price.
@remindme in 6 months
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Will you zap me 21 sats if I was right?
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I agree it’s opaque to me how their profit works
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Also why are they only earning 0.7% profit when they are getting 3-4% on treasuries. That's a lot of money spent on overhead bribing politicians and such. Haha
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Wow! Dove into the prospectus I assume? Yeah I’m disappointed at that profit number. Tether is making billions in profit and USDC is no where close.
Maybe I should buy puts!
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When is the unlock? That's when you want puts.
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Good question I’m not sure
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26 sats \ 0 replies \ @Aardvark 17h
Believe it or not, calls.
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Circle's business model is yield skimming. Not sure that justifies 50x earnings.
0 sats \ 0 replies \ @Car 3h
Funny times reminds me of Netzero when they went public in the 2000’s everyone in tech was saying at the time broadband was around the corner no one listened. They ended up have a short history.
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