🪙 Stablecoins’ public push

Monday, November 20, 2023 by Snacks
If at first you don’t succeed… (Jakub Porzycki/Getty Images)

If at first you don’t succeed… (Jakub Porzycki/Getty Images)

If at first you don’t succeed… (Jakub Porzycki/Getty Images)

If at first you don’t succeed… (Jakub Porzycki/Getty Images)

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Last Week’s Market Moves
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Hey Snackers,

The cutest thing to come out of President Biden’s meeting with China’s leader: Xi hinted that his country would send new pandas to American zoos, after three of them were recently returned to China. The four remaining pandas in the US are also on loan from China. Panda diplomacy — it’s a thing.

Stocks had their third straight winning week with the S&P 500 up nearly 8% this month. Investors were optimistic after more data showed that inflation and the labor market were cooling. FYI: US markets will be closed on Turkey Day and wrap up early on Black Friday.


1. Circle eyes an IPO as the tightening stablecoin market benefits from high rates

Strikin’ while the iron’s warm… A cornerstone of the crypto ecosystem is looking to go public. Again. Stablecoin issuer Circle is considering an IPO early in the new year, Bloomberg reports, after trying to go public last year at a $9B valuation. Now that crypto winter’s thawing and coin prices have been popping, Circle’s seeing spring shoots. Refresher: a stablecoin is a cryptocurrency whose value is (theoretically) pegged to another asset, like the US dollar. Circle issues the second-largest stablecoin, USDC, which has a $24B market cap.

  • USDC is pegged to the USD. 1 USDC is designed to = $1. Circle says it holds cash (or cash equivalents) to back every USDC it issues — aka it’s “fully reserved.”

  • Like digital dollars... People use stablecoins sorta like people use $$: to transact. But stablecoin transactions are on a blockchain and can involve smart contracts (think: decentralized finance).

On unstable ground… USDC’s share of the $126B stablecoin market has fallen to about 20%. The coin’s market cap (how much investors have bought) is down nearly 50% on the year. Circle earns interest on customers’ dollar deposits, so fewer deposits = less earnings potential. Meanwhile, leading stablecoin tether (aka USDT) has gained market share since traders flocked from USDC to USDT in March — when Circle said it had $3.3B in reserves at the collapsed Silicon Valley Bank. Competition’s heating up: in August PayPal launched its own stablecoin, PYUSD.


A smaller slice doesn’t mean going hungry… Despite its shrunken market share, Circle’s benefited from higher interest rates: its revenue in the first half of this year ($779M) was more than all of last year combined. Experts say the stablecoin market is expected to hit $2.8T in the next five years, so there could be plenty of stable slices to go around. But with traders betting that the Fed will start cutting rates by May, Circle may have incentive to go public while rates are high.

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2. Coming up this week

New chip, who dis… Nvidia reports Q3 #s tomorrow after posting a record $13.5B in Q2 sales. The stock has more than 3x’d this year as companies scrambled to nab Nvidia’s AI chips (as of August it accounted for 70% of the world’s AI chip sales). Last week Nvidia introduced a more powerful version of its genAI-fueling chip. But it faces storm clouds: the US has cracked down on chip exports to China, including blocking Nvidia’s H800 chip — which Chinese tech titans had reportedly ordered $5B worth of. Still, Nvidia expects to post $16B in Q3 sales.

Prep the stuffing… and neutral table topics. Thanksgiving trips will be especially hectic this year: the TSA is expecting the busiest holiday travel season ever, forecasting it’ll screen 30M passengers over 12 days (safe to say the airline industry has recovered). It’s not just in the skies: AAA expects that nearly 50M people will hit the road between Wednesday and Sunday (download some pods). On the bright side, turkey inflation is cooling: the cost of an average Thanksgiving dinner for 10 is $61, down from last year’s $64 record.

Zoom out

3. Stories we’re watching

Google it… The Justice Department’s antitrust trial vs. Google ended last week (minus closing arguments), but the tech giant has to wait till next year to hear its verdict. The DoJ alleged that Google has a monopoly on the search biz. And at the end of the 12-week trial it got the cherry on top of its evidence sundae: an expert let slip that Apple gets 36% of Google’s revenue from search ads on Apple’s Safari browser, where Google’s the default engine. If Google loses, it may have to rework these kinds of agreements. The extreme potential penalty: breaking up its biz.

A level scrolling field… The FCC targeted “digital discrimination” with new rules last week. Regulators say it’s the first major US digital civil-rights policy, which aims to block telecom companies like AT&T, Verizon, and Comcast from providing unequal internet service to different communities. AT&T has been accused of laying modern fiber-optic cable in affluent areas while not updating old networks in low-income areas — but charging the same price. The rules are part of the Biden admin’s goal to connect all Americans to high-speed internet by 2030.

What else we’re Snackin’

  • Fired: In a late-Friday surprise, Sam Altman was forced to step down as the CEO of ChatGPT maker OpenAI. The company said an internal review found Altman was “not consistently candid” with his board.

  • Madein: Chinese fast-fashion titan Shein is asking international sellers to list on its marketplaces. That could speed deliveries and expand Shein’s rep beyond “Made in China” as its labor practices get scrutinized.

  • Sooty: The EPA is expected to soon roll out stricter rules around pollution. Biz groups repping mining, oil, manufacturing, and timber are pre-resisting the regulations, saying they’d hinder economic growth.

Snack Fact of the Day

Macy’s is the world’s second-largest consumer of helium, thanks to its parade balloons

This Week

  • Monday: Earnings expected from Zoom

  • Tuesday: Earnings expected from American Eagle, Abercrombie & Fitch, Baidu, Best Buy, Dick’s Sporting Goods, Urban Outfitters, Lowe’s, Nordstrom, and Nvidia

  • Wednesday: Earnings expected from Deere

  • Thursday: Markets closed for Thanksgiving. Macy’s 97th Thanksgiving Day Parade

  • Friday: Native American Heritage Day. Black Friday

Authors of this Snacks own bitcoin and shares of: Alphabet, Apple, and Nvidia

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