Ice and Fire: The alt season has not come, but the cryptocurrency stocks have ushered in spring

Jessy, Golden Finance

As Bitcoin breaks through new highs, the highly anticipated altcoins have not arrived as expected. The current market share of Bitcoin is still above 60%, and as Bitcoin enters consolidation, some altcoins have even fallen to the price before Bitcoin's current rise.

There is no new narrative in the currency circle, and with the listing of Circle, crypto concept stocks have once again attracted a lot of attention from funds. The concept of coin stocks has become the new narrative of the industry at present. Crypto companies are scrambling to go public, and coin stocks have ushered in a surge.

The integration of encryption into traditional finance is a new narrative, because the listing of Circle has also ignited Wall Street's enthusiasm for encryption concept stocks. However, this enthusiasm has not been transmitted to the cryptocurrency itself. The surge in coin stocks including Circle and the cold reception of altcoins, this divergence phenomenon may not change in the short term, because in essence, coin stocks are still traditional financial assets. The surge in coin stocks is actually traditional finance actively embracing "fintech" rather than actively embracing native encryption. The rise of altcoins requires a flood of money after the entire macroeconomic environment improves.

The Wall Street meal replacement logic behind the surge in crypto concept stocks

Circle shares were listed on the New York Stock Exchange on June 5 with an issue price of $31. The closing price on the first day was $83.23, a surge of 168% from the issue price, and the current price is $107.

Circle's listing and the "encryption + payment" story behind it have successfully attracted the attention of traditional financial institutions and investors on Wall Street. The surge in ircle has led to a general rise in US crypto concept stocks, such as Coinbase, MicroStrategy, Marathon Digital, and PayPal, which have all accumulated more than 10% in the past four days.

The popularity of crypto concept stocks may be a kind of meal replacement logic that Wall Street is running, which wants to take advantage of the growth dividend of encryption while avoiding the risks of directly holding cryptocurrencies. By buying stocks, institutional investors can not only make compliant arrangements, but also enjoy the benefits of the Fed's interest rate cut cycle on technology stocks. Interestingly, they may not care about the nature of Circle's USDC business and revenue capabilities at all, but just treat it as a payment technology stock. After all, Circle's current market value is US$23.9 billion, and according to the prospectus, its profit in 2024 is only US$156 million.

Compared to directly purchasing cryptocurrencies, traditional financial institutions seem to be more willing to embrace the narrative of "integrating crypto into traditional finance", such as stablecoins for cross-border payments and settlements, etc., and believe that this is a more compliant, more predictable, and relatively controllable investment target.

Although related to cryptocurrencies, these stocks are still traditional financial assets in essence. Investors buy the company's equity, and its value is driven by factors such as the company's fundamentals, traditional financial market sentiment, and macroeconomics.

In addition, the recent market expectations for the Fed's interest rate cut have increased, which is good for technology growth stocks, and crypto concept stocks have also benefited from this.

In sharp contrast to the popularity of crypto concept stocks, the cryptocurrency market itself, especially many altcoins other than Bitcoin and Ethereum, performed poorly or even fell sharply. This is in stark contrast to Wall Street's pursuit of crypto concept stocks. Crypto native investors do not seem to have gained confidence from events such as Circle's listing. Fomo sentiment did not appear in the native currency circle, but crypto concept stocks in Hong Kong and US stocks ushered in Fomo sentiment.

The popularity of crypto concept stocks has even absorbed some of the funds that might have flowed into the native crypto market, especially even if a small amount of funds remain in the crypto market, in the current environment, they are more inclined to flow to relatively "safe" Bitcoin and Ethereum.

This has led to a situation where crypto concept stocks have skyrocketed, while altcoins have not risen but fallen.

What are the crypto concept stocks worth paying attention to in the US stock market?