Circle (USDC) DD

I initially wrote this DD February 1st when the news first broke that the Biden administration would be dropping an executive order in the Feb-March timeframe. I decided to shelve the DD until the announcement was imminent because by and large my dog has a longer attention span than you guys. There has been a lot of FUD today around Circle doubling it’s valuation from 4.5B to 9B and the official merger date being delayed. The reason for this is that the Biden Administration is dropping his Executive Order next week. This very likely has significant positive implications for Circles business model. Positions - I have 5k warrants at 1.67, this is less than 1% of my portfolio. More bullish on crypto. i am not a financial advisor and that all users should complete their own due diligence. Introduction - Sup guys, I’ve decided to rotate back into SPACs after making 200k (15x) in a pixelated video game called DeFi Kingdoms. Normally anything below a 10x doesn’t titillate me anymore since becoming Crypto Curious, but this play is easy money and CND is trading below NAV at 9.98. CND (Circle Inc.) is poised for a meteoric rise in February and is currently trading below NAV. This is fundamentally the easiest lay up I’ve seen in a long time that doesn’t involve hopeful math to determine a low float count. Circle created the cryptocurrency USDC which stands for United States Dollar Coin. It is called a “stable coin” because it’s value does not fluctuate due to being pegged to the USD. Every single USDC coin is backed by 1 USDC and Circle is heavily audited to verify this. Circle makes their money by generating interest on the backed USD. With a market cap of 50 billion dollars that is a significant amount of stable income. As you can see from the picture USDC is the 5th largest market cap. It’s competitor https://preview.redd.it/i52u6qw52gi81.png?width=512&format=png&auto=webp&s=f1f1f2395a2b38e3c31f9037cb1fc1a27a107bd1 Tether (USDT), another US Dollar Stable Coin, is 3rd. More on that in a moment. The Executive Order - The Biden Administration made a press release last week indicating that it planned to place an executive order for cryptocurrencies as early as February as a matter of “National Security”. Sounds pretty scary, what could “National Security” mean? Surely the U.S. doesn’t feel threatened by cryptocurrencies. The US does not feel threatened by crypto- at least not yet. What the Executive Order is about is the third largest cryptocurrency, USDT aka Tether. Tether is also a stable coin, but a much shadier version. It is mostly backed by Chinese debt rather than 1-1 US Dollar like USDC. How much debt and which specific type of debt is unknown, Tether refuses to be audited. You may remember back in October the SEC approved the BitCoin futures ETF. It was hypothesized that an ETF backed by BitCoin could not be far behind. We found in January that the asset backed BTC ETFs were all denied. While not the only reason given for the denial, a primary reason was that Tether is being used to manipulate BTC price. Being able to manipulate the amount of digital USD is a matter of national security. It does make sense that the digital USD should be regulated within the US. Here’s a Bloomberg terminal rumor supporting that the Executive Order is related to stable coins (update1:I don’t feel like looking, someone find this and i’ll edit the post) Update 2: Another reason to think that this Executive Order will be beneficial is that minorities and LGBTQ are much more likely to hold cryptocurrencies. If this would be something that would hurt them financially it would not be released before midterms. It’s much more likely that this will be positive. CND Price Appreciation - So we’ve determined that Circle’s primary competitor is shady as hell and is the likely target of this executive order. How does that help Circle? You can anticipate that a substantial portion of Tether’s market cap is likely to be absorbed by USDC. Circle recently applied for a US bank charter making USDC the only stable coin that is going to have a bank charter backing it. Circle has firmly taken the stance that they are willing to do whatever it takes to be compliant with US regulations. It is highly likely the FED will pivot to making USDC more akin to the CBDC for the US but that is realistically further out, however could be implied by the media at the time of the executive order. Circle will see a huge increase of their balance sheet as a result of capital flowing from Tether to USDC increasing Circles profits. The Trade - CND is currently trading below nav at 9.98 providing an excellent asymmetric risk/reward. The March 10C and 12.5C and shares/warrants are the way to play. An IV of 60% on the March 12.5C seems bananas for the volatility the catalyst will cause. I don’t give price targets, because assigning an arbitrary number to exit is stupid. You should look to exit when you see the media picking up that Circle will be the major beneficiary of this Executive Order.

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Circle (USDC) DD

bullish

I initially wrote this DD February 1st when the news first broke that the Biden administration would be dropping an executive order in the Feb-March timeframe. I decided to shelve the DD until the announcement was imminent because by and large my dog has a longer attention span than you guys. There has been a lot of FUD today around Circle doubling it's valuation from 4.5B to 9B and the official merger date being delayed. The reason for this is that the Biden Administration is dropping his Executive Order next week. This very likely has significant positive implications for Circles business model.

Positions - I have 5k warrants at 1.67, this is less than 1% of my portfolio. More bullish on crypto.

i am not a financial advisor and that all users should complete their own due diligence.

Introduction -

Sup guys, I've decided to rotate back into SPACs after making 200k (15x) in a pixelated video game called DeFi Kingdoms. Normally anything below a 10x doesn't titillate me anymore since becoming Crypto Curious, but this play is easy money and CND is trading below NAV at 9.98.

CND (Circle Inc.) is poised for a meteoric rise in February and is currently trading below NAV. This is fundamentally the easiest lay up I've seen in a long time that doesn't involve hopeful math to determine a low float count.

Circle created the cryptocurrency USDC which stands for United States Dollar Coin. It is called a “stable coin” because it's value does not fluctuate due to being pegged to the USD. Every single USDC coin is backed by 1 USDC and Circle is heavily audited to verify this. Circle makes their money by generating interest on the backed USD. With a market cap of 50 billion dollars that is a significant amount of stable income.

As you can see from the picture USDC is the 5th largest market cap. It's competitor



Tether (USDT), another US Dollar Stable Coin, is 3rd. More on that in a moment.

The Executive Order -

The Biden Administration made a press release last week indicating that it planned to place an executive order for cryptocurrencies as early as February as a matter of “National Security”. Sounds pretty scary, what could “National Security” mean? Surely the U.S. doesn't feel threatened by cryptocurrencies. The US does not feel threatened by crypto- at least not yet. What the Executive Order is about is the third largest cryptocurrency, USDT aka Tether.

Tether is also a stable coin, but a much shadier version. It is mostly backed by Chinese debt rather than 1-1 US Dollar like USDC. How much debt and which specific type of debt is unknown, Tether refuses to be audited. You may remember back in October the SEC approved the BitCoin futures ETF. It was hypothesized that an ETF backed by BitCoin could not be far behind. We found in January that the asset backed BTC ETFs were all denied. While not the only reason given for the denial, a primary reason was that Tether is being used to manipulate BTC price.

Being able to manipulate the amount of digital USD is a matter of national security. It does make sense that the digital USD should be regulated within the US. Here's a Bloomberg terminal rumor supporting that the Executive Order is related to stable coins (update1:I don't feel like looking, someone find this and i'll edit the post)

Update 2: Another reason to think that this Executive Order will be beneficial is that minorities and LGBTQ are much more likely to hold cryptocurrencies. If this would be something that would hurt them financially it would not be released before midterms. It's much more likely that this will be positive.

CND Price Appreciation -

So we've determined that Circle's primary competitor is shady as hell and is the likely target of this executive order. How does that help Circle? You can anticipate that a substantial portion of Tether's market cap is likely to be absorbed by USDC. Circle recently applied for a US bank charter making USDC the only stable coin that is going to have a bank charter backing it. Circle has firmly taken the stance that they are willing to do whatever it takes to be compliant with US regulations. It is highly likely the FED will pivot to making USDC more akin to the CBDC for the US but that is realistically further out, however could be implied by the media at the time of the executive order. Circle will see a huge increase of their balance sheet as a result of capital flowing from Tether to USDC increasing Circles profits.

The Trade -

CND is currently trading below nav at 9.98 providing an excellent asymmetric risk/reward. The March 10C and 12.5C and shares/warrants are the way to play. An IV of 60% on the March 12.5C seems bananas for the volatility the catalyst will cause. I don't give price targets, because assigning an arbitrary number to exit is stupid. You should look to exit when you see the media picking up that Circle will be the major beneficiary of this Executive Order.

read-time
4 min
11.10
Target Price
7/ 10
Confidence
2-6 Months
Timeframe
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Earnings Release
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News
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SEC
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Sentiment
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