The stablecoin craze sweeps the global market, "valuation bubble" alarm sounds

According to Zhitong Finance APP, the global surge in stablecoins has driven significant stock price increases for related emerging technology companies, leading some investors to gradually feel concerned about this frenzy. The stock price of "the first stablecoin stock" Circle (CRCL.US) has soared about 500% since its listing in New York three weeks ago, but its short positions have also been steadily rising. In South Korea, global and local funds have been selling off shares of Kakaopay Corp. as the stock has doubled in the past month. This cautious trading stands in stark contrast to the frenzied retail trading. Despite regulatory bodies and the financial industry taking a cautious stance on stablecoins, strong support from U.S. President Donald Trump has fueled the boom in stablecoins. SeokKeun Ha, Chief Investment Officer at Eugene Asset Management in Seoul, stated, "This reminds me of the crazy buying by retail investors in metaverse-related stocks in 2020 and 2021. This is essentially a bet on government policy," influenced more by sentiment than by any actual fundamental factors. The stablecoin boom drives related stocks to surge The momentum for stablecoin development is becoming increasingly strong, while the regulatory framework is also being continuously improved. This month, the U.S. Senate passed legislation regarding stablecoins, but the bill has yet to pass in the House of Representatives. The Legislative Council of Hong Kong passed a stablecoin bill in May, and South Korean President Lee Jae-myung has promised to allow domestic companies to issue such tokens. In addition to the progress of the Trump-supported "GENIUS Act" in the U.S. Congress, Circle's strong listing performance is also an important driving factor. By market share, the company's USDC is the second-largest stablecoin, second only to Tether, which is operated by a private company based in El Salvador. Circle's market capitalization has surpassed $40 billion, exceeding more than half of the companies in the S&P 500 index. According to S&P Global, Circle's rapid rise has led some traders to bet that its stock price will decline, with the short position ratio steadily rising to over 25% of the circulating shares. This year, Kakaopay's stock, listed in Seoul, has outperformed all its peers in the FTSE Global FinTech and Blockchain Index, with a price increase nearly double that of Robinhood (HOOD.US). While retail investors have been buying the stock, domestic and foreign institutions have remained net sellers. Citigroup analysts John Yu and Alicia Yap recently stated that despite the long-term growth potential, "this opportunity is still in its early stages, and its timing and ultimate user acceptance are difficult to determine." They rated Kakaopay as "sell," believing its valuation is too high The stock surge related to stablecoins is spreading across global markets, driving up the stock prices of Kakao, the parent company of Kakaopay, and its competitor Naver. In the United States, stocks of Circle peers like Coinbase (COIN.US) have also seen an increase. However, despite strong support from leaders like Trump and Lee Jae-myung, risks remain. The Bank of Korea has warned that the adoption of stablecoins could hinder effective monetary policy. The Bank for International Settlements has stated that the future of stablecoins is "uncertain." Many still believe that the technology has potential for trading and storing value in the stable cryptocurrency space, but the high valuations of related stocks have also raised concerns. Last Friday, Kakaopay's stock fell by 10% after a brief suspension, as regulators reminded investors to exercise caution amid such a rapid surge. Cha So-Yoon, a stock investment manager at Taurus Asset Management in Seoul, stated, "Stablecoins are a very important theme, despite the risks. It is still too early to determine whether the stock prices of related companies are at reasonable levels or to assess their valuations, but regardless, stablecoins will be issued, and issuers will reap billions in profits."