Crypto Mania Boosts Circle's IPO. How to Invest Now. — Barrons.com

By Paul R. La Monica

Crypto is on fire again. After a deep slump earlier in the year, prices are jumping and new investors are piling in. In a stunning sign of the times, the initial public offering of Circle Internet Group surged some 170% on its first day of trading Thursday.

Circle, which issues a so-called stablecoin tied to the U.S. dollar, ended the day with a market capitalization of nearly $20 billion. It tacked on another 40% Friday afternoon.

"We're engaged in building the new internet financial system, one that is more accessible and reduces cost and frictions," Circle's chief financial officer, Jeremy Fox-Green, said from the NYSE on the listing day. "We're only just getting started. These are very early days."

So much for the crypto bear market of 2025, which lasted all of 2 1/2 months. The enthusiasm is palpable for both Bitcoin and companies with ties to cryptocurrencies. Bitcoin prices are once again above $100,000, putting them near a record high after briefly falling below $75,000 in early April.

Retail investors are flocking to Bitcoin, thanks to exchange-traded funds from the likes of iShares and Fidelity. Crypto brokerage Coinbase Global is now in the S&P 500. At the same time, firms like MicroStrategy and GameStop are becoming Bitcoin treasuries, scooping up cryptos to add to their balance sheets.

"The more adoption of Bitcoin there is in corporate treasuries, the higher the price goes. I can do the supply and demand in my head," says David Waddell, CEO and chief investment strategist with Waddell & Associates, adding that the fervor for Bitcoin is like "religion being adopted."

The new bull run is fueled by a friendly new regulatory landscape in Washington, including President Donald Trump, who has skin in the game through his namesake Trump Media & Technology Group. The social-media company is buying Bitcoin and recently filed with the Securities and Exchange Commission to launch the Truth Social Bitcoin ETF. The president and his family are also backers of World Liberty Financial, a cryptocurrency platform that has issued the WLFI token. Trump's sons Eric and Donald Jr. are shareholders in American Bitcoin, an investment subsidiary of miner Hut 8 that is going public through a merger with competitor Gryphon Digital Mining.

"It's both a catalyst and a conflict," says Dan Weiskopf, a senior portfolio manager of Subversive ETFs, which manages the Unusual Whales Subversive Republican Trading ETF, which invests in securities owned by GOP members of the House and Senate. Along those lines, the iShares Bitcoin Trust ETF and MicroStrategy are two top holdings in the fund.

But investors thinking of scooping up Bitcoin or other cryptocurrencies or stocks that are part of the digital currency ecosystem need to be extremely cautious. There is still a lot of hype, and the crypto space is known for nothing if not breakneck price swings.

"How do you value Bitcoin? It's been so volatile," says Tony Roth, chief investment officer of Wilmington Trust. "I'm not opposed to putting your toe in the water. But it's purely a speculative capital-appreciation play."

Still, ignoring the potential of Bitcoin, stablecoins, and other digital assets probably isn't a good idea, either. Bitcoin proponents argue that you just need to know what you are getting into, and prepare for massive swings in the prices of both cryptocurrencies and the stocks tied to them.

"Retail investors were depressed earlier this year," says Matt Hougan, chief investment officer of Bitwise Asset Management, a crypto investing firm that runs a suite of ETFs. "But traditional institutional investors, hedge funds, and family offices have never been anything but bullish. This pullback was just a hiccup."

Hougan thinks cryptocurrencies as an asset class are still in their infancy. The total value of all cryptos is currently about $3.3 trillion, with about $2.1 trillion of that just in Bitcoin. By way of comparison, the global supply of gold is worth nearly $23 trillion and stocks worldwide have a combined market capitalization of more than $115 trillion. So Hougan thinks it's reasonable for investors to have about 5% of their assets in cryptos if they're bullish — and that they should have at least 2% to 3% in crypto just to have a market-weighted neutral position. He's not alone.

"Bitcoin isn't going away. We've crossed that Rubicon. It's an asset that is here to stay," says John Darsie, partner and global head of business development with SkyBridge Capital, adding that it should, over the long term, be a viable alternative to fiat currencies. "Bitcoin serves as sort of a report card on the responsible behavior of global governments," he says.

Will Reeves, founder and CEO of Fold Holdings, a publicly traded financial services firm that focuses on Bitcoin, adds that crypto bulls have demographics in their favor. That could fuel further gains.

"Bitcoin is the millennial asset. This segment is just coming into their financial prime," Reeves says.

Circle, led by tech industry veteran Jeremy Allaire, is benefiting from increased demand for digital versions of cross-border payments in real time. Circle is the issuer of USDC, which competes with Tether, the issuer of the USDT stablecoin.

Stablecoins are cryptocurrencies that are specifically tied to the value of another asset, usually conventional currencies like the dollar or euro. That makes them far less volatile than Bitcoin and other cryptos. USDC and USDT both have prices hovering around $1. Stablecoins have become more popular for financial institutions and consumers to make seamless real-time digital transfers of money, such as remittances. There are also some stablecoins backed by physical commodities, such as gold.

Traders may soon have more investing options to profit from Bitcoin's boom. The eye-popping IPO for Circle, along with successful recent listings in the U.S. for Coinbase rival eToro and Galaxy Digital, the crypto firm run by longtime Bitcoin bull Michael Novogratz, may lure even more digital asset firms to Wall Street, especially now that the regulatory climate is more open to crypto than it was under former SEC Chair Gary Gensler.

"The past administration wasn't favorable to blockchain and stablecoins, " says Kevin Lehtiniitty, CEO of payments network Borderless.xyz. "We expect a lot more companies to go public in crypto because Gary Gensler and his regime is gone." Lehtniitty pointed to digital wallet firm Fireblocks, exchange and trading platform Crypto.com, and compliance and data platform Chainalysis as potential IPO candidates.

Alyse Killeen, managing partner with venture-capital firm Stillmark, adds that optimism about the Genius Act — which is currently making its way through Congress and would provide more of a regulatory framework for stablecoins — is a positive for the crypto industry.

Investors should still be wary, though. The explosive rally has led to concerns that the market's enthusiasm is, if not entirely unwarranted, at least a little premature and overdone. For one, it's unclear if scores of crypto companies (not to mention hundreds of currencies and tokens) will all survive. Much like the dot-com boom and subsequent bursting of the bubble a quarter-century ago, some of today's leaders may not be around decades from now. Or they may be much smaller.

That's why investors who believe in cryptocurrencies, blockchain technology, and digital assets might just be better off owning Bitcoin through the readily accessible retail ETFs now available from many large Wall Street firms. Stillmark's Killeen describes the ETFs as "familiar on-ramps to Bitcoin" that have created a much broader investor base.

Even an executive with a publicly traded crypto firm admits that ETFs may be the best bet for most investors. "If you've been in crypto for a while, you are very much used to volatility," says James Gernetzke, chief financial officer of Exodus Movement, a self-custodial crypto wallet provider specializing in Bitcoin. "But the ETFs are very important. Not everyone can be a crypto bro."

But everyone can be a crypto enthusiast that can profit from the long-term growth of the industry without taking on the extra risk associated with the companies that don't wind up becoming the Amazon.coms, Meta Platforms, or Alphabets of Bitcoin.

Write to Paul R. La Monica at paul.lamonica@barrons.com

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