BitMEX founder Arthur Hayes has warned that the upcoming new wave of stablecoin companies will attempt to emulate Circle's successful IPO, but most are likely to fail.

In a post on Monday, Hayes cautioned that while Circle's IPO marks the beginning of the "stablecoin craze," most new publicly listed stablecoin companies will be overvalued and ultimately fail.

He stated, "This listing marks the beginning of this round of the stablecoin craze, not the end." He also added that this bubble will burst after a stablecoin issuer goes public, "separating foolish investors from hundreds of billions of dollars in capital through financial engineering, leverage, and astonishing performance tricks."

Hayes indicated that the next wave of listings will be "Circle's imitators" and advised investors to "trade these garbage stocks like a hot potato."

However, Hayes did not urge traders to short these stocks, as the pro-crypto sentiment in the U.S. and the narrative of the "stablecoin craze" will initially drive prices up.

He warned, "These new stocks will leave short sellers with bruised faces."

The U.S. Senate is scheduled to vote on key stablecoin legislation on June 17, which, if passed, will further propel this narrative.

Chainlink co-founder Sergey Nazarov also stated on Tuesday, "U.S. stablecoin regulation will trigger a new wave of stablecoins in the U.S. and globally."

Hayes believes that the fundamental issue for any stablecoin issuer is how to distribute their product. He pointed out that there are only three viable distribution channels: cryptocurrency exchanges, Web2 social media giants, and traditional banks.

He stated that if new stablecoin issuers cannot access these channels, they "have no chance of success."

Hayes explained that most new publicly listed stablecoin companies will be overvalued and fail because distribution channels are locked by existing players, and new entrants will have to pay high fees to exchanges or offer yields to depositors, while social media companies and banks will build their own stablecoins.

He said, "For those of us who have been in the trenches for a long time, it will be quite ridiculous to watch those suited clowns successfully deceive the investing public into putting their money into these garbage companies."

Hayes believes that Circle (CRCL) is "wildly overvalued" at this stage and is giving 50% of its interest income to Coinbase (COIN). However, he added that its price will "continue to fluctuate."

Circle successfully completed its IPO on June 5, with its stock price soaring significantly by the end of the trading day.

According to Google Finance data, CRCL has risen over 80% since its listing, reaching nearly $165, a historic high, on June 16.

Related: JPMorgan applies for "JPMD" trademark for crypto payment services

Original article: “Arthur Hayes: Trade new stablecoin IPOs like a hot potato”

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