"First stock of stablecoin" Circle's stock price quadrupled in three days after listing! Setting a new record for U.S. stocks since 2020

According to Zhitong Finance APP, after a strong capital flow on Thursday, the stock price of the globally renowned stablecoin issuer Circle (CRCL.US), known as the "first stock of stablecoins," quadrupled in just three days since its IPO. The after-hours pricing on Monday indicated that the stock still seems to have further upside potential.

The company's IPO was priced at $31, and it doubled on the first day, rising another 30% on Friday to close at $107.70. On Monday, the stock price surged over 27%, breaking through $135 per share, which is four times the IPO price, as investors continued to bet on new forms of currency, payment transfer methods, and the future of the financial system. Major Wall Street commercial banks are exploring the possibility of jointly issuing stablecoins, which has also contributed to the continued rise in Circle's stock price.

As of Monday's close, Circle's stock price was $115.25, with an intraday high of $138.570. Based on the closing price, the company's stock has increased by 270% over three days since the IPO, and based on the intraday high, it has more than quadrupled. According to statistics on U.S. IPOs, Circle's +270% three-day cumulative increase is significantly the highest among large IPOs that have raised over $1 billion since 2020, ranking first in the three-day cumulative stock price performance of large U.S. IPOs in the past five years.

What is a stablecoin? Compared to highly volatile cryptocurrencies like Bitcoin (BTC-USD), stablecoins can complete transactions rapidly within a "stable" price range. Not all stablecoins are "born equal" (remember the Terra stablecoin collapse?). Circle's USDC (USDC-USD) is fully pegged to the U.S. dollar, and we can think of it as the "casino chips" of the crypto world or "digital cash" existing on the blockchain system.

These "crypto-dollar" currencies issued by Circle and other stablecoin issuers maintain an equivalent dollar reserve to support their peg (i.e., fiat currency collateral). Circle also earns interest by investing most of its reserves in low-volatility, short-term U.S. Treasury bonds, with current short-term U.S. Treasury holdings reaching hundreds of billions of dollars.

In terms of overall usage, according to the latest estimates from Ark Invest, the investment firm founded by "Wood Sister" Cathie Wood, the trading volume of stablecoins is expected to exceed that of Visa (V.US) and Mastercard (MA.US) in 2024, although these figures may also reflect repetitive wallet transfers, robotic trading, or other short-term arbitrage activities.

As another channel for mainstream financial assets to enter the crypto investment space, Circle is the first large IPO in the cryptocurrency industry since the cryptocurrency exchange Coinbase (COIN.US) in 2021. The USDC stablecoin issued by Circle can be transferred at internet-level speeds, with transaction costs only a fraction of a cent, and almost instant settlement.

Additionally, Circle is actively embracing regulation in all the countries it operates in, such as the GENIUS Act being accelerated by the U.S. Congress and the implementation of the "Stablecoin Regulation" in Hong Kong This has given many investors more confidence in the investment efficiency of the stablecoin market, which has now become a popular way for companies to pay salaries to employees globally or conduct precise peer-to-peer transactions.

Stablecoins are essentially "on-chain dollars," backed 1:1 by highly liquid dollar assets (cash, short-term U.S. Treasury bonds). Stablecoins combine "dollars" with "blockchain," providing a new payment medium that is both stable and efficient, while also showcasing the commercial potential of "digital dollarization" to the capital markets. Undoubtedly, high interest rates and the rate hike cycle allow these reserves to earn considerable interest, bringing near-bank-level profits to stablecoin issuers (such as Circle and Tether), while also providing "quasi-money market fund" returns.

Regulations such as the U.S. GENIUS Act, the EU MiCA, and Hong Kong's Stablecoin Regulation are being implemented or have already been established, and major Wall Street banks also plan to jointly issue stablecoins; coupled with Circle being the first major cryptocurrency company to IPO after Coinbase in 2021, the scarcity and policy dividends have ignited capital, leading to speculative trading around the "stablecoin concept."

In the past period, the main use of stablecoins was as a channel for traders to move funds in and out of other cryptocurrencies. However, an increasing number of cryptocurrency investors are optimistically believing that with the strong support for cryptocurrency development from Trump’s return to the White House, stablecoins may soon play a more significant role in the global business and trade system, especially as a stable payment tool for cross-border payments