Following Circle’s headline-grabbing IPO, the stablecoin sector is bracing for an onslaught of public offerings. But according to crypto industry veteran Arthur Hayes, this new wave of stablecoin mania could be catastrophic for everyday investors.
In his latest essay titled “Assume the Position,” the BitMEX co-founder offers a scathing critique of what he sees as an inevitable, tech-fueled flood of stablecoin issuers with most destined to fail.
Circle Sparks IPO Frenzy, But Big Tech Will Crush Competition
Hayes argues that Circle’s IPO has set off a chain reaction, inspiring other companies to launch their own stablecoins and eventually go public. He expects Big Tech giants like Meta, X (formerly Twitter), and Airbnb to embed stablecoins directly into their platforms, integrating them into commerce, messaging, and payouts.
“This is great for tech stockholders,” Hayes writes, “but terrible for upstart stablecoin issuers. They’ll be crushed by the sheer scale of companies like Meta and Airbnb.”
Distribution, Not Technology, Is the Real Battle
According to Hayes, stablecoin success will hinge on one thing: distribution.
“If they have no distribution, they have no chance of success,” he emphasizes. Without listings on exchanges, partnerships with banks, or integration into widely used platforms, new stablecoin projects are effectively DOA (dead on arrival).
He warns retail investors to ask one critical question before investing in any stablecoin issuer:
“How will they distribute their product?”
If there’s no clear answer, “run away,” Hayes cautions.
A Coming Bubble, Fueled by Hype and Charisma
Hayes paints a familiar and grim picture: a charismatic founder, big promises, flashy presentations, and a product that “uses financial engineering, leverage, and showmanship” to lure in unsuspecting investors. At some point, a major stablecoin firm will pull off a blockbuster IPO, only for the stock to implode later.
“A very bankable charismatic individual will get on stage and spew all sorts of nonsense… convincing you that the leveraged piece of dogshit he is selling is about to corner the multi-trillion-dollar TAM.”
Don’t Short It Yet But Don’t Get Comfortable
Despite the bearish forecast, Hayes is not recommending investors short these stocks at least not immediately.
“These new stocks will rip the faces off of shorts,” he warns. Circle’s shares, he adds, will likely continue “levitating” for now despite being, in his view, “insanely overvalued.”
His final piece of advice for investors trying to navigate this new phase of crypto-finance:
“Trade this shit like a hot potato.”
