The stablecoin wave is reshaping global financial markets, fueling unprecedented rallies in related stocks. Yet beneath this euphoria, institutional investors are mounting cautious bets against the sector's brightest star.
Circle's Meteoric Rise: From IPO to Market Sensation
- IPO Launch: Circle Internet Group (CRCL) debuted at $31 per share in early June
- Peak Valuation: Shares skyrocketed to $298.99 within weeks
- Current Trading: Stabilized at $180.43 (as of last Friday), representing 482% growth since listing
As the issuer of USDC—the world's second-largest stablecoin—Circle now commands a $40 billion market cap, surpassing half the companies in the S&P 500 index.
The Short Seller Conundrum
Despite retail investor enthusiasm, institutional skepticism grows:
"This mirrors the 2020-21 metaverse stock frenzy. Investors are gambling on policy winds rather than fundamentals."
— SeokKeun Ha, CIO at Eugene Asset Management
Key warning signs:
- 25% of CRCL's float is now sold short (S&P Global data)
- Korean stablecoin play Kakaopay plunged after tripling in value
- Citigroup issued a "sell" rating on Kakaopay, citing "excessive valuations"
Regulatory Tailwinds vs. Institutional Hesitation
United States
- The Genius Act passed Senate review, establishing stablecoin frameworks
- Awaiting House approval
South Korea
- New administration pushing Digital Asset Basic Act
- Aims to legitimize stablecoin issuance
👉 Why top analysts remain cautious about stablecoin stocks
Central Bank Concerns
- Bank of Korea warns of potential monetary policy disruptions
BIS report highlights stability risks:
- Fails key monetary system tests
- May only play "complementary role"
- User protection safeguards needed
Market Realities vs. Retail Enthusiasm
| Metric | Circle | Kakaopay |
|---|---|---|
| YTD Return | +482% | +200% |
| Institutional Activity | Increasing shorts | Net selling |
| Analyst Sentiment | Mixed | "Sell" (Citigroup) |
FAQ: Understanding the Stablecoin Divide
Q: Why are stablecoin stocks rallying?
A: Political endorsements and regulatory progress create optimism, though fundamentals remain unproven.
Q: What risks do short sellers see?
A: Valuation disconnects, uncertain adoption timelines, and potential regulatory reversals.
Q: How does USDC differ from other stablecoins?
A: As the #2 player behind USDT, USDC emphasizes transparency with regular attestations—but still faces redemption risk concerns.
Q: Could stablecoins replace traditional currencies?
A: BIS research suggests they'll likely remain niche instruments due to systemic vulnerabilities.
👉 Expert insights on crypto market trends
The Path Forward
While retail investors chase stablecoin equities, smart money recognizes the sector's growing pains. The coming months will test whether current valuations reflect sustainable adoption—or speculative excess.