The IPO of the crypto company Circle is a resounding success. But why are Bitcoin and other cryptocurrencies faltering?

Price spikes are commonplace for tech stocks. Nevertheless, Circle's New York IPO on Friday caused quite a stir. The provider of the stablecoin USDC—the second most important digital dollar after Tether's USDT—ended its first day of trading with a market capitalization of $22 billion. Based on its past twelve-month earnings, this corresponds to a price-earnings ratio of 125.

Digital dollars are en vogue. Because the US Congress is currently debating a stablecoin bill designed to remove legal obstacles, a whole range of companies are looking to launch or use such means of payment. Stablecoins can be exchanged in real time and at very low cost, even across national borders. They are also programmable money, making them suitable for use by AI agents, for example.

According to a report by Fortune, Apple, Airbnb, and Google are now also planning to use stablecoins. Elon Musk's X is already known to launch stablecoin payments this year. Tether and Circle alone have issued digital dollars with a volume of $216 billion. Several other providers, including Donald Trump's family business, are following suit.

Somewhat surprising is that the value of the blockchains on which these stablecoins run is currently weakening. Ether, the Ethereum token, and Solana are trading well below their highs. These two blockchains are actively used to digitize other assets, namely US Treasury bonds.

But whenever concerns arise on the stock market, such as in connection with the tariff wars or, more recently, the rift between Donald Trump and Elon Musk, these cryptocurrencies react much more sensitively than the stock markets. Even the price of Bitcoin, whose narrative as digital gold is particularly easy to understand, is trading below its recent high.

Second-tier projects such as Aave, Chainlink, or Uniswap, whose services are actually in high demand, are now only a shadow of their former size in terms of their cryptocurrencies.

That could soon change. Many industry experts expect a spectacular upswing in the broad crypto market, as in previous cycles. However, further interest rate cuts are a necessary prerequisite for this. These have stalled, at least in the US, because the Federal Reserve wants to wait and see how the tariffs affect inflation.

Speculative assets like cryptocurrencies only really heat up when the financial markets are flooded with liquidity. And there are signs that this will happen in the coming months. Some forecasters expect global liquidity to peak in the third quarter. Cryptocurrencies should therefore also reach record prices by then.

Until then, technology stocks with a crypto connection are likely to perform better. The Winklevoss twins now also want to benefit from this. According to Bloomberg, the two Facebook co-founders are planning an IPO for Gemini, their crypto trading platform.

An article from the « NZZ am Sonntag »