tl;dr
Former BitMEX CEO Arthur Hayes warns that Circle’s recent IPO signals the start of a "stablecoin mania" bubble, likely to end in significant losses due to overvaluation and distribution challenges. He argues that major players like Tether and Coinbase dominate distribution channels, making it diffic...
Former BitMEX CEO Arthur Hayes has issued a stark warning regarding Circle's recent IPO, describing it as the kickoff to a "stablecoin mania" bubble. He cautions that this speculative frenzy is poised to end in significant losses, primarily due to challenges in distribution and an oversaturated market. Hayes emphasizes that established players like Tether (USDT) and Circle benefit from monopolized distribution channels and influential network effects, creating formidable barriers for new entrants.
Hayes argues that the success of a stablecoin hinges on its ability to achieve large-scale distribution. With legacy financial institutions and major crypto exchanges such as Coinbase controlling key channels, newcomers face near-insurmountable obstacles. He foresees that only issuers with existing partnerships or strong network effects will weather the impending market downturn, while others will suffer substantial financial damage.
Despite Hayes' cautious outlook, the stablecoin market has demonstrated robust growth. Market capitalization has surged to a record $228 billion in 2025, fueled by USDT and USDC’s solid expansion and increasing liquidity on exchanges. USDT's market cap has grown over 13% year-to-date, surpassing $155 billion, while USDC has rebounded strongly after the 2023 Silicon Valley Bank crisis, climbing 39% to $61 billion. Additionally, ERC-20 stablecoin reserves and yield-bearing stablecoins are seeing considerable increases, underscoring ongoing sector momentum.
Hayes highlights the profitability of Tether, which leverages spreads on U.S. Treasury holdings, as a major draw for speculators despite the constricted distribution environment. He warns investors to scrutinize how new stablecoin issuers plan to distribute their products before committing capital, cautioning that the current "stablecoin mania" might soon lead to a harsh market correction that exposes less-prepared players.