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

Jessy, Jinse Finance

As Bitcoin breaks through to a new high, the anticipated Altcoins have not arrived as expected. Currently, Bitcoin's market dominance remains above 60%, and as Bitcoin enters a consolidation phase, some Altcoins have even dropped to prices before this round of Bitcoin's rise.

The crypto lacks new narratives, and with Circle's listing, crypto concept stocks have once again attracted significant capital attention. The crypto-stock concept has become the industry's new narrative, with crypto enterprises rushing to go public, and crypto stocks experiencing a surge.

Crypto integration into traditional finance is the new narrative. Circle's listing has ignited Wall Street's enthusiasm for crypto concept stocks. However, this enthusiasm has not translated to cryptocurrencies themselves. The divergence between the surge of crypto stocks, including Circle, and the cooling of Altcoins may not change in the short term. Essentially, crypto stocks are still traditional financial assets. The surge of crypto stocks is actually traditional finance actively embracing "financial technology," rather than embracing native crypto. The rise of Altcoins would require a broader macroeconomic environment improvement.

Wall Street's Proxy Logic Behind Crypto Concept Stock Surge

Circle's stock was listed on the NYSE on June 5th at $31. The first day's closing price was $83.23, a 168% surge from the issue price, and is currently priced at $107.

Circle's listing and its "crypto + payment" story successfully attracted traditional financial institutions and investors' attention. Circle's surge drove a general rise in US crypto concept stocks, with Coinbase, MicroStrategy, Marathon Digital, and PayPal all rising over 10% in the past four days.

The crypto concept stocks' popularity might be Wall Street running a proxy logic, wanting to ride the crypto growth dividend while avoiding direct cryptocurrency holdings' risks. Institutional investors can compliantly layout and enjoy the Federal Reserve's interest rate cut cycle's benefits for tech stocks by buying stocks. Interestingly, they might not care about Circle's USDC business nature and revenue capacity, just treating it as a payment tech stock. After all, Circle's current market value is $23.9 billion, while its 2024 projected profit is only $156 million according to the prospectus.

Compared to directly purchasing cryptocurrencies, traditional financial institutions seem more willing to embrace the "crypto integration into traditional finance" narrative, such as stablecoins for cross-border payments and settlements, considering it a more compliant, predictable, and relatively controllable investment target.

Although related to crypto, these stocks are essentially traditional financial assets. Investors are buying company equity, whose value is driven by company fundamentals, traditional financial market sentiment, and macroeconomic factors.

Additionally, recent market expectations of Federal Reserve interest rate cuts favor tech growth stocks, benefiting crypto concept stocks.

In stark contrast to crypto concept stocks' popularity, the cryptocurrency market itself, especially Altcoins beyond Bitcoin and Ethereum, is performing poorly, even significantly declining. This creates a huge contrast with Wall Street's pursuit of crypto concept stocks. Native crypto investors seemingly haven't gained confidence from events like Circle's listing. FOMO sentiment hasn't emerged in the native crypto circle, but instead appeared in Hong Kong and US crypto concept stocks.

The crypto concept stocks' popularity might even divert funds that could have entered the native crypto market, and even the small amount of funds remaining in the crypto market currently tend to flow towards relatively "safe" Bitcoin and Ethereum.

This has led to the situation of crypto concept stocks surging while Altcoins not only fail to rise but actually decline.

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