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Welcome back! Things continue to look rocky for a US-China trade deal. Casey has the latest, but we also suggest turning on Truth Social notifications for Donald Trump if you really want to stay up to speed. 

Meanwhile, we expect Circle to make its public market debut tomorrow. Ben explains why it’s hard to know what will happen. Here goes:

Trade deal troubles

Mastering The Art of the Deal is apparently not easy. 

There are supposedly 69 days left to ink a permanent trade agreement with China, but progress has shown signs of stalling in recent days. Here’s what we know:

President Trump in the wee hours of the morning took to social media to comment on the status of trade talks with China. Spoiler: There doesn’t seem to be much advancement. 

“I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!” Trump posted on Truth Social just after 2 am ET Wednesday.

Last month’s US-China detente placed a mutual temporary (90-day) rollback on tariffs. The US lowered tariffs on China from 145% to 30%, and China decreased levies on US goods from 125% to 10%. 

The deal also apparently included a rollback in the strict mineral export restrictions China implemented in retaliation to “Liberation Day,” according to comments from US Trade Representative Jamieson Greer.

Last week, when Trump accused China (again via a Truth Social post) of “violating its agreement,” he was talking about China “slow rolling” its side of the deal, Greer said. Greer mentioned restrictions on rare-earth exports specifically. 

China is dragging its feet on rolling back the mineral export restrictions, according to a Wall Street Journal report. That’s because the US Commerce Department on May 12 warned that using Huawei Technologies’ Ascend AI chips “anywhere in the world” violated export controls. 

The US did this as part of a continued effort to limit technological advancements in China, so it makes sense that the country would counter with retaliatory measures of its own. 

Back to the rare earths. Why does the export restriction matter? China mines 60% of the global supply and manufacturers 90% of the global supply of rare earth magnets. Rare earth elements are essential for technology; they are in cell phones, cars, lights, batteries, you name it. 

Solvent extraction (the difficult process of separating rare earth minerals from one another) comes with bad impacts on the environment: high levels of toxic waste, water pollution, etc. The process was actually created in the US in the 1950s, but it’s expensive and unpopular in the states. 

All this to say, US-China tensions may be manifesting themselves as export controls and tariffs, but they’re just tools in a broader economic battle.

— Casey Wagner

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The number of US ETFs that focus solely on offering spot bitcoin exposure. But a 19b-4 filed by NYSE Arca yesterday signals a Truth Social-branded bitcoin ETF could soon join the segment. 

The trust’s sponsor is Yorkville America Digital, which finalized a partnership with Truth Social parent company Trump Media and Technology Group in April. You might recall this related piece Ben wrote in March.

Stablecoin issuer Circle’s expected listing on the New York Stock Exchange tomorrow comes roughly four years after another crypto milestone: Coinbase’s public market debut. 

I wrote yesterday about how the apparent solid institutional demand for Circle doesn’t necessarily spell out what will happen once CRCL shares list. 

"It’s difficult to predict the precise impact of this listing,” said Fineqia senior associate Matteo Greco. “Back in 2021, there was widespread belief that Coinbase’s stock would soar following its Nasdaq debut. The outcome proved quite different.”

Coinbase’s valuation at the time of its direct listing in April 2021 was widely considered to exceed fair value, Greco told me. And the timing was “unfortunate.”

COIN shares opened at $381 but closed at $328 on day one, Yahoo data shows. Though BTC reached a new high in November 2021, that was the beginning of a bear market. Coinbase stock dipped below $50 at times in mid-2022. 

Although the stock has recovered to around $260 today, early investors have effectively been underwater for four-plus years, Greco noted.

With stablecoin use cases gaining steam and proposed US legislation on the table, the timing for Circle’s listing appears strong. Still, forecasting how CRCL shares will move on the NYSE is challenging, Greco argued.

“The main factor will be its valuation relative to what market participants deem to be its fair value,” he said.

The $7.2 billion valuation Circle is targeting (given the Monday filing upsizing its IPO) is below the $7.7 billion valuation it got in an April 2022 funding round. The final IPO price is reportedly expected Wednesday evening.

Compass Point analyst Ed Engel pointed out that the $7.2 billion valuation implies a 14.3x multiple on annualized first quarter EBITDA; Coinbase and Robinhood trade at about 30x their estimated 2025 EBITDA.

VanEck’s Matthew Sigel told me yesterday that Circle can be considered a “boring is beautiful trade” given its profitability, minimal leverage and position within Web3 financial infrastructure. But retail investors “may find it harder to latch on” to a company with less volatility and brand recognition than Coinbase, he argued. 

Circle’s USDC stablecoin holds a roughly 24% market share in the ~$250 billion stablecoin segment. It generates highly visible interest income that can scale alongside stablecoin adoption, Engel said. 

But, he added: “We also expect near-term USDC supply to remain driven by DeFi and crypto trading volumes, which are historically correlated with crypto market cycles.”

Check Blockworks.co for updates on Circle’s final IPO pricing and CRCL stock movements.

— Ben Strack