On 6/5, @circle will IPO on the NYSE with the ticker symbol CRCL in the highest profile IPO we’ve seen since $COIN back in 2021. Circle aims to raise $624 million in a 24 million share offering at a target valuation of $6.7 billion.

Cathie Wood’s ARK will reportedly take $150m and Larry Fink (Blackrock) a further $60m. This accounts for ~35% of the raise and Bloomberg has reported that the raise is oversubscribed. Wood and Fink are basically TradFi KOL’s and they’ll likely push the stablecoin narrative amongst big traditional finance money as well as retail via media appearances.

Crypto natives have often criticized Circle for their high OPEX (h/t @TheOneandOmsy) and how it leaks a lot of value to Coinbase. However, the reality is that Circle equity will be one of the only ways to express a bet on stablecoin growth & blockchain technology.

Given this is a regular IPO and not a direct listing, insiders will not be able to dump their shares in the first 180 days. If the deal is as oversubscribed as reported, it’s fairly plausible that $CRCL will trade very well after the IPO. For the crypto natives out there, you can view this like a low float high FDV coin launch with big TradFi KOLs (Wood, Fink) behind it.

We are also in a period where tech IPOs have performed very well, so I’m inclined to fade the pessimism around $CRCL. USDC is the second largest stablecoin with strong distribution, and the issues around OPEX can be fixed. GENIUS Act is on the horizon. If the average offer-to-current % for tech IPOs is 54.7%, if $CRCL launches at $6.7B it can trade above $10B in the near future.

The question is, how will this affect the DeFi and crypto markets?

Is It Time for Stablecoin Summer?

How $CRCL trades will have a large effect on how DeFi assets will trade. After all, how can one justify a $5B FDV on $ENA if $CRCL trades at similar levels? If $CRCL trades above $10B shortly after the IPO, I believe it will help lift crypto valuations for projects with stablecoin exposure & cashflows.

For example, if Circle made $157M in net income in 2024 and trades at $10B, $MKR (now rebranded to $SKY) looks more attractive on a relative basis when it currently trades at a $1.4B valuation making $107M in net income. Of course this method isn’t perfect but the point is that if TradFi bids $CRCL equity, it will likely have a ripple effect on DeFi assets.

Perhaps, the beginning of Stablecoin Summer?

The Trade

I believe the $CRCL IPO creates an interesting setup for DeFi. Stablecoin issuers like $MKR and $ENA could be a direct beta play. Tangential plays like $PENDLE $SYRUP and $AAVE also make sense. And if these coins run, perp/spot DEXes are likely to see more onchain activity. If it wasn’t clear, I think $CRCL is a good bet too.

One may look at this IPO as a potential top signal, since $BTC peaked on April 14, 2021 when Coinbase IPO’d. I argue that there is less froth in the markets this time around; BTC.D was collapsing in April 2021 versus now when altcoins have generally been shrekt.

Another main difference is that $COIN was a direct listing, which meant that retail who bought $COIN was exit liquidity for insiders. $CRCL is less likely to have this issue, since insiders are locked for 180 days.

In summary, I believe $CRCL will perform very well after the IPO given it is likely one of the best proxies to bet on the growth of stablecoins and blockchain technology. Buying Circle equity by itself is a trade, but I also believe it has the chance to catalyze a mini DeFi season as $CRCL may lift valuation ceilings for high quality DeFi assets. If I am wrong and $CRCL trades below the IPO price, I can use that as a clear invalidation for the trade.

In summary, I believe $CRCL will perform very well after the IPO given it is likely one of the best proxies to bet on the growth of stablecoins and blockchain technology. Buying Circle equity by itself is a trade, but I also believe it has the chance to catalyze a mini DeFi season as $CRCL may lift valuation ceilings for high quality DeFi assets. If I am wrong and $CRCL trades below the IPO price, I can use that as a clear invalidation for the trade.

Disclosure: I am long $MKR (rebranded to $SKY). You can view my theiss here.

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