Many friends ask me, should I buy #Circle when it goes public?!

I probably won't touch it for now, not to mention whether a PE of over 40 times is expensive or not!

The core thing to understand is the profit logic of stablecoins. Circle is essentially a shadow bank issuing US Treasury bonds to global retail investors to alleviate the gradual decline of the dollar! This strategy is fundamentally flawed; relying on global retail investors to back the credit of a sovereign nation is quite ridiculous.

Because for every 1 USDC stablecoin issued, at least 80% must be allocated to US Treasury bonds. Now that long-term US Treasury rates are so high, and with the June Treasury auction still unsettled, sovereign nations are selling, selling, selling. I won't elaborate on this, as I've been highlighting the global bond market for the past month.

Then there's the interest rate cut cycle. Stablecoin companies like #Tether have been very profitable in recent years. The first reason is their large scale, and the second reason is the high US Treasury rates. With 100 billion, short-term US Treasuries at 5%, doing nothing for a year would yield 5 billion, but in the foreseeable future, it's highly likely that such favorable rates won't be available!

Finally, the deep binding with Coinbase, a 50% revenue share, and high operating costs severely restrict financial performance.

However, #Circle is still a company worth long-term attention. It is like #Coinbase back in the day, possessing uniqueness and immense symbolic value, being the first stablecoin giant to go public on the New York Stock Exchange. Waiting for a better price to enter is not too late!

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