Written by: Matt Hougan, Chief Investment Officer of Bitwise
Translated by: AIMan@Jinse Finance
Circle's IPO reminds us why crypto investors can benefit from allocating to both crypto assets and crypto-related stocks.
Circle, the issuer of USDC, the world's second-largest stablecoin, went public on the New York Stock Exchange last Thursday with the ticker CRCL. This was one of the most successful IPOs in recent years:
The offering was oversubscribed 25 times, with institutional investor demand reaching 25 times the company's planned issuance;
The issue price was set at $31 per share, higher than the prospectus pricing range of $25-27;
On the first day of trading, the stock price surged 167% on high volume, rising to $105 by Tuesday (when I wrote this).
It's not hard to understand investors' eagerness to gain exposure to CRCL. Stablecoins have become the "second killer app" in the crypto space after Bitcoin. Over the past five years, stablecoin AUM has grown from $4 billion to $250 billion, with the U.S. Treasury predicting this could exceed $2 trillion by 2030 - it's hard to find another industry where a government predicts a 700% growth rate in the next five years.
Stablecoin issuers like Circle are at the core of the ecosystem: they absorb dollars from investors, issue digital tokens (stablecoins) representing these dollars, and invest the funds in U.S. Treasuries, promising investors they can exchange stablecoins for dollars at a 1:1 ratio at any time, generating profits by earning Treasury interest (stablecoins themselves do not pay returns to holders).
This is a simple yet excellent business model. With current short-term Treasury rates around 4%, stablecoins generate about $10 billion in high-margin revenue annually for issuers. If stablecoin AUM grows to $2 trillion, annual revenue could reach $80 billion.
But today, I want to discuss something beyond Circle's business model or economic prospects, though I believe they are impressive enough.
A more important point.
Building a Comprehensive Crypto Investment Portfolio
Beyond Bitcoin, one of the oldest and most critical debates in the crypto space is: Where will value flow? To base-layer assets like Ethereum and Solana that provide core infrastructure for the decentralized economy, or to upper-layer applications (like Uniswap, Polymarket) that build revenue-generating products using this infrastructure?
Circle is a typical application layer case: it leverages public chain infrastructure while paying extremely low fees. In other words, Circle can issue stablecoins on Ethereum for less than a cent, instantly reaching hundreds of millions of global users - supporting low-cost instant cross-border transfers, accessing DeFi applications, programming through smart contracts, etc.
Just as the internet democratized global content production thirty years ago (anyone connected could publish content instantly accessible globally), public chains are achieving a similar breakthrough in finance: financial infrastructure that anyone can develop.
This is not limited to Circle and stablecoins. More and more crypto-related public companies are building new business models based on blockchain:
Coinbase generates significant revenue from its Layer-2 network Base deployed on Ethereum;
Galaxy, known for crypto trading, could earn nearly $100 million annually from staking services;
Mastercard operates platforms integrated with blockchains like Ethereum and Avalanche, helping businesses conduct more efficient lending and cross-border payments.
This means that multiple parts of the crypto ecosystem will form a symbiotic relationship in the long term: core infrastructure will increase in value as more applications are integrated, and the application layer will create value as the infrastructure continues to improve.
Of course, we cannot be certain which will capture more value - the blockchain itself or the companies built on it - which is why I believe the optimal strategy is to allocate to both.
