Stablecoin fever sweeps the global market with "valuation bubble" alarm sounding

The global stablecoin craze has driven the stock prices of related emerging technology companies to soar, causing some investors to gradually become concerned. The stock price of "Stablecoin top stock" Circle (CRCL.US) has surged by about 500% since its listing in New York three weeks ago, but its short positions have also continued to rise. In Korea, global and local funds have been selling off shares of Kakaopay Corp. as its stock has doubled in the past month. These cautious trades contrast sharply with the frenzy of retail trading. Despite regulatory agencies and the financial industry taking a cautious stance on stablecoins, the strong support from U.S. President Donald Trump has fueled the prosperity of stablecoins. SeokKeun Ha, Chief Investment Officer of Seoul's Eugene Asset Management, said, "This reminds one of the crazy buying of metaverse-related stocks by retail investors in 2020 and 2021. This is essentially a bet on government policies," more influenced by emotions than by any actual fundamental factors. The stablecoin craze is driving related stocks to surge. The momentum of stablecoin development is becoming increasingly strong, while regulatory frameworks are also continuously improving. This month, the U.S. Senate passed legislation related to stablecoins, but the bill has not yet been passed in the House of Representatives. The legislative body in 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 "GENIUS Act" supported by Trump in the U.S. Congress, the strong performance of Circle's listing is also an important driving factor. By market share, the company's USDC is the second largest stablecoin, second only to Tether operated by an unlisted company based in El Salvador. Circle's market value has exceeded $40 billion, surpassing more than half of the companies in the S&P 500 index. Data from S&P Global, Inc. shows that Circle's rapid rise has led to some traders betting that its stock price will fall, with short positions steadily rising to over 25% of outstanding shares. Kakaopay's stock, listed in Seoul this year, has outperformed all peers in the FTSE Global FinTech and Blockchain Index, with gains nearly double those of Robinhood (HOOD.US). While retail investors have been buying the stock, domestic and foreign institutions have been net sellers. Analysts John Yu and Alicia Yap of Citigroup recently stated that despite long-term potential, "this opportunity is still in its early stages, making it difficult to determine its timing and user acceptance." They have rated KakaoPay as a "sell," believing its valuation is too high. Stocks related to stablecoins are rising in global markets, prompting the stock prices of Kakao's parent company, Kakao, and its competitor Nave to increase. In the U.S., the stock prices of peers such as Coinbase (COIN.US) and Circle have also risen. However, despite strong support from leaders like Trump and Lee Jae-myung, risks still exist. The Bank of Korea has warned that the adoption of stablecoins could hinder effective monetary policies. The Bank for International Settlements has said the future of stablecoins is "uncertain." Many still believe this technology has potential in stable cryptocurrency transactions and storing value, but the high valuations of related stocks have raised questions. Last Friday, Kakaopay's stock fell by 10% after a brief trading halt, as regulatory agencies reminded investors to remain cautious in such a rapid bull market. Cha So-Yoon, a stock investment manager at Seoul's Taurus Asset Management, said, "Stablecoins are a very important topic, despite the risks. It is still too early to judge whether the stock prices of related stocks are at a reasonable level or to assess their valuation, but in any case, stablecoins will be issued, and the issuers will enjoy billions of dollars in revenue."