Arthur Hayes Warns Stablecoin IPO ‘Mania’ Will End in Crashes

BitMEX co-founder Arthur Hayes predicts upcoming stablecoin company public listings to crash after initial price surges. He recommends rapid trading rather than holding these stocks long-term.

Hayes published his analysis Monday on Substack, pointing to Circle's June 5 IPO as the start of what he calls a “stablecoin mania” cycle. Circle's CRCL shares jumped over 80 percent from their listing price, reaching just under $165 on June 16.

Distribution Channels Key to Success

The former exchange executive identifies distribution channels as the critical factor separating successful stablecoin issuers from failures. He notes three viable distribution methods: crypto exchanges, major social networks, and traditional banks. Circle shares 50% of its interest income with Coinbase for distribution access.

Hayes argues most new stablecoin companies lack these distribution partnerships and will fail despite initial investor enthusiasm. He expects these firms to use “financial engineering, leverage, and amazing showmanship” to attract capital before valuations collapse.

Related: Crypto Adoption Climbs with Stablecoins — State of Crypto Report

Short-Term Gains Expected Despite Long-Term Risks

The analyst refrained from recommending short positions, citing pro-crypto sentiment and pending regulatory developments. The U.S. Senate scheduled a vote on stablecoin legislation for June 17, which Hayes expects will drive prices higher initially.

Chainlink co-founder Sergey Nazarov also predicted stablecoin regulation will trigger new issuer launches globally.

Hayes described his trading strategy in direct terms: “Trade this shit like you would a hot potato.” He warned investors to focus on one key question when evaluating stablecoin companies: “How will they distribute their product?”

The warning comes as the stablecoin sector attracts increased attention from traditional financial markets. Hayes expects a wave of “Circle copycats” to attempt public listings, capitalizing on current market enthusiasm before underlying business challenges become apparent to investors.

Read on: Demand for Circle Shares Pushes IPO Valuation to $6.9B

Circle became the first major stablecoin issuer to go public through its recent listing, establishing a template other companies may attempt to follow despite lacking comparable distribution advantages.