“She’s so highhh, High above me” – Tal Bachman
The resounding success of the recent Circle IPO has put Wall Street on notice. The stock went public on June 4 at $31 and is currently trading at $228 at the time of this writing. Their current PE Ratio is an absurd 2845.
This is, basically, insane. It is now open season for IPOs, with Gemini, Kraken, FalconX, and more moving quickly to do the same.
They are a great company, and the passage of the GENIUS Act for stablecoins buoyed their future prospects, but this is not behaving like a rational investment.
Similarly, the BTC treasury companies Smarter Web Company and Metaplanet, based in the UK and Japan, respectively, trade at over 7 times and 40 times their BTC NAV.
Coinbase, likely due to the Circle step-up in value, has also repriced upwards by over 20% in the last month, despite a month with no meaningful change to the BTC price or volumes.
Although we believe the Bitcoin economy is the way of the future, these wild multiples will eventually come back into line with reality. The question is, where do they meet in the middle? Can you get into these deals early and benefit from hype arbitrage?
It’s also interesting to ask why companies like Semler Scientific, the second BTC pub co with over 4400 BTC on hand currently, trade at a discount to NAV. It’s telling that Semler recently added two podcast hosts, Natalie Brunell and Joe Burnett, as a board member and Director of Bitcoin Strategy. Semler wisely recognizes the game they are playing: hype capitalism.
The increasingly crowded BTC treasury plays in the market are competing for attention. It’s not complicated to take out debt and own BTC. What’s complicated is winning trust, connecting with a culture and audience, and maintaining momentum.
Public markets are experiencing what the crypto industry saw in 2017, with a Cambrian explosion of ICOs—a recognition of a whole new field with unknowable upside. This is a situation ripe for speculation.
Key considerations for hype include jurisdiction, business fundamentals such as income and strategic advantage, regulation, and marketing.
It’s easy to feel scared about this insanity. There will be a reversion to the mean. It will be painful for some. But just like the internet and ICO bubbles of the past, some winners will emerge from the madness.
If you are going to participate, understand you are gambling, not investing. In the long term, companies with responsible financial strategies, clear communication, and consistency will ultimately prevail.
View original post on X here.
