Arthur Hayes, Co-founder of Bitmex and Financial Analyst, predicts that the digital asset market will witness a new collapse.
Entrepreneurs see the risk of accelerated success taking action on Wall Street for Circle (CRCL), the USDC’s stable currency company.
As Cryptonoticias reported on June 5th, CRCL made its debut on the New York Stock Exchange (NYSE) This is 168% higher than the price of the first public offering (IPO).
The following TradingView graph shows you the performance of a great CRCL from the start to the market until you write this note.
In this regard, Hayes states: “The circle is very overvalued, but its prices continue to rise,” he said, in his opinion, prices where investors are willing to pay for the stock. It is not justified by their true performance or perspective against competitors such as Tether.USDT station.
In other words, analysts think the story is too optimistic, and it almost attracts investors who get information paying more to Coinbase, a company that still relies on the US exchange. This is because Circle provides the platform with 50% of its Interesting Interest (NIM) in exchange for access to the client network.
Now, Hayes emphasizes, “The exit to this bag marks the principle, not the end of the stubcoin heat of this cycle,” saying:
“The bubble explodes after the launch of stubcoin issuers into the public markets in the United States, which separates billions of capital, through a combination of financial engineering, leverage and epic talent. As always, most people who are separated from valuable capital do not understand the history of stubborn history. They have an emitter of whether to succeed or not.”
Co-Founder for Arthur Hayes, Bitmex and Financial Analyst.
Through his paper, Hayes is skeptical and proposes a tour of the historical context he has risen to. Stubcoin domains, especially USDT. Without this review, his warning about the bubble might seem like a mere speculative opinion.
Therefore, USDT became the dominant stub coin
The Hayes summary begins in 2015 when exchange platforms such as Bitfinex, Okcoin and Huobi were faced with serious problems in the Grand China region (Hong Kong, the Continent, Taiwan China).
At the time, Tether provided digital dollars that allowed for quick and inexpensive transfers without relying on traditional banking systems. They are seeking access to the markets where Chinese investors tried to protect themselves from the original investors (as happened in August 2015), and the dollar. USDT has become a virtual “bank account”gains the trust of the Asian crypto community.
Hayes has since mentioned the rise in the 2017 coin’s first offer (ICO). This is the moment when we merged the tether domains. At the time, platforms like Poloniex and Binance were unable to work with fíat money due to bank restrictions, so they offered USDT exchange pairs of Altcoins and created a network of economically important users.
This integration, coupled with popular adoption in the Global South (a term used to refer to economies such as Africa, Latin America and parts of Asia), has made USDT a major Stablecoin. They have outstanding profitability by not paying interest to depositors. Tether should be made clear that it will primarily invest funds supporting USDT in assets such as US Treasury debt, and will earn profits that generate interest in these fixed funds.
” Between 2015 and 2017, Tether achieved product market adjustments and created a competitive advantage over its future competitors. Thanks to the trust entrusted to Tether in the Chinese commercial community, USDT has become the accepted currency on the main exchange platform.
Today, USDT is the most valuable stability, with a market capitalization of over $15.6 billion.
According to Hayes, a blunt example of the Tether domain in the “Global South” is Nigeria. USDT has become an important alternative in this country, especially as local currency (Naira) suffers from high inflation and restrictions on access to the dollar. Hayes speaks of a conversation with a bank manager who revealed that, despite the efforts of the central bank to ban cryptocurrency, about a third of Nigeria’s gross domestic product (GDP) is managed by USDT.
The adoption occurred “from underneath” rather than regulatory levies, indicating how USDT has permeated the economy in a vulnerable financial system. In that sense, he emphasizes: “If regulators try to make it happen and act, adoption is already too late because it is endemic to the population.”
For Hayes, this historical context suggests that stable success depends on distribution channels such as exchanges, social networks, or traditional banks. Access that does not easily replicate new emitters.
That’s what he says: “Western actors were rushing to collect money in stories of payments with cryptocurrency and create competitors for Tether.
At this point, Hayes’ analysis becomes more suspicious. The faint reference to Boston and the lack of development about what it means to “have no connection to the great China” weakens the argument that relies more on personal impressions than specific data.
The bubble starts to swell
But what was the use of the historic tour of Stubcoin? To show How they are technical solutions led to stories that captivate new investors. And this sample is the outlet to the circle bag, the catalyst for this new speculative heat on the market. For Hayes, “the next wave of quote will be the imitator of the circle,” and therefore consider the following:
“Relatively speaking, these actions are even more overvalued in price/AUC ratio (Spanish detention assets) than in circles. In absolute terms, they do not eclip using distribution channels.
Arthur Hayes, Bitmex Co Founder and Financial Analyst.
As USDT and USDC are already integrated into the main exchange platform that favors circulation, the new Stablecoins emitters face a difficult barrier to overcome. Similarly, traditional banks like Goal and X (formerly Twitter) and JP Morgan develop their own, silly idiots internally, closing doors to third parties.
According to entrepreneurs, this structural domain leaves almost room for its competitors and denies copycats its imitators for almost certain failure.
All this happens, but the US Congress is discussing the sanctions of the National Innovation Orientation, known as a genius, and the Sadaya establishment law. That’s a regulation It seeks to regulate the issuance of stable currencies in a country and integrate them into the financial system.. The project was approved by the Senate and must now be handled by the House of Representatives.
In this regard, Hayes states: “The magnitude of fraud depends entirely on the regulations of stables promulgated in the US. It depends on the regulations of stables promulgated in the US. It will be free, but emitters will be more free, but if emitters can pay the holders yields, financial engineering and LELAGE will use agricultural requests. Again, issuers will create a fleeting algorithm Ponzi scheme for stability.
Specifically, Hayes states that if US stubcoin regulations are too loose or not directly exist, emitters have room for dangerous or deceptive financial practices. For example, they can create almost solid support systems or use leverage to provide high artificial yields. Therefore, it attracts investors with few sustainable promisesas happened at UST, Terraform Lab is stable.
As reported by Cryptonoticia, Terraform Labs’ stable currency, which promised to revolutionize the sector, collapsed as it lost equality with the dollar and affected thousands of investors. Without a doubt, it has been one of the most traumatic financial events in recent years that has lost more than $40 million.
It should be remembered that UST provided an annual rate of over 20% (APY) via the Anchor Protocol, an algorithmic system designed to maintain stability.
In conclusion, Hayes believes that when investors discover that these new stubcoins lack mass adoption, their shares will leave billionaires’ losses. So his advice is: “Negotiating this shit like a hot dad.”
In other words, the current euphoria will be an opportunity to make money on corporate behaviour, but investors must be wary to get out before the Stablecoins bubble explodes.