5th June 2025 > > Circle & China.

tl;dr

Circle has a license to print money, and now all investors get a chance to participate. Hong Kong points the way forward for the Chinese embrace of cryptos.

Market Snap

Market Wrap

We have had a tight trading range between $100k and the ATH set on 22nd May at $112k for nearly a month now. Much of this resilience can be put down to the ongoing inflows to the spot BTC ETFs, which are now back on track after a three-day wobble straddling last weekend.

Curious Cryptos’ Commentary – Technical analysis

Technical analysis is snake oil, no doubt about that. But when it tells a story I want to hear, I am all for it.

Curious Cryptos’ Commentary – Circle Internet Group Inc. (Circle)

Circle is the issuer of USDC, a stablecoin backed by cash or cash-like instruments (mostly short-term treasuries) at a collateralisation of a little over 100%, which is exactly what stable coins should look like. None of this algorithmic nonsense, which significantly raises the probability of an implosion one day when markets are stressed. Both the Maker ecosystem and the Ethena ecosystem fall prey to such a catastrophic risk, an unscheduled rapid disassembly one might call it.

Founded in 2013 to offer a range of services to help businesses integrate digital currencies into their operations, it is the launch of USDC that has transformed Circle’s fortunes, to the extent that it is making its debut on the New York Stock Exchange today at a valuation of $6.9bn. That’s going to be a nice payday for some early stockholders.

It is interesting timing, for regular readers know that the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) is currently mired in some partisan politicking. I guess this IPO shows a strong degree of expectation from investors, the regulators, and the stock exchange itself, that GENIUS will make it onto the statute book largely unchanged, and soon, which will be good news for everyone.

Stable coins are a license to print money. Popping some Circle shares into a tax-free wrapper might look interesting to some crypto converts, such as me.

Curious Cryptos’ Commentary – Hong Kong

China’s experiment with legitimising the use of cryptos in Hong Kong continues apace.

Not content with the simple trading of spot cryptos, the regulator is now opening up the derivatives markets for professional investors. Retail should never use leverage, and all derivatives incorporate leverage. However, for sophisticated investors, the use of futures, calls, and puts is a valid strategy. The regulator is also licensing “virtual asset trading platforms”, it has specifically given approval for staking services, it has approved futures and spot ETFs, whilst the assembly recently passed legislation for the regulation of stablecoins. Oh, and let’s not forget the favourable tax treatment of cryptos, something the UK government should – but never will – take notice of.

There can be no doubt that these developments meet with the approval of dictator XI and his murderous henchmen.

It was on my recent fact-finding trip to China that the sheer enormity of the restrictions placed upon the Chinese as a people became clear to me. It is impossible to use a VPN, Western websites are banned, a ban which is more than 98% effective, messaging apps that we all know and love are strictly off-limits, and there is no chance of being able to invest in cryptos apart from a very small, very unregulated, and dangerous peer-to-peer market which I could not recommend.

It will be exciting when all of the activity that is allowed to happen in Hong Kong gets rolled out into the Chinese mainland, where there is a huge well of pent-up, untapped demand for BTC and other cryptos. I read that the combined size of all the stock markets and bond markets in China total $28 TRILLION. If 3%-5% of those funds move into cryptos, mostly BTC, that will add $840bn to $1.4 TRILLION of buying demand to the already supply-restricted BTC market.

That will be very nice for holders of BTC.