Summary Circle Internet Group is upgraded to Strong Buy as valuation falls below $60, offering compelling risk/reward for long-term investors. CRCL's profitability and scalability are driven by USDC volume and short-term interest rates, with recent Fed cuts posing near-term headwinds. Despite crypto market weakness and regulatory uncertainty, USDC's market cap remains resilient, and Circle's compliance and transparency give it leadership. Upcoming Q4 earnings will clarify the impact of USDC's growth and rate cuts, while long-term blockchain adoption provides structural tailwinds. Circle Internet Group ( CRCL ) is the stablecoin investment. Three times I've covered it, but I only rated it Buy in December when the valuation finally came below $100. With the recent fall under $60, I am here not only to reaffirm but to upgrade it my second Strong Buy ever. Recap of Previous Theses My previous discussions of Circle have been a rundown of its business model, how it creates earnings, and CRCL's price relative to the growth potential of those earnings. As investments related to crypto and blockchain go, Circle's stablecoin product, primarily USDC ( USDC-USD ), struck me as one of the most practical and economical. Slide from December thesis (Q3 2025 Company Presentation) I was impressed at their ability to scale and run profitably with only short-term interest rates on the dollars they tokenize. Screenshot from December thesis (Q3 2025 Form 10Q) Earnings (which I adjusted for depreciation, asset fluctuations, and tax benefits) annualized to $697.6M. I posited that CRCL would need to grow earnings by 17% annually for their market cap at the time to reflect a P/E of 10 by 2030, which I thought was possible as stablecoin has found more use cases in the aftermath of the GENIUS Act and as Circle's operating leverage demonstrates itself. Assessing Distress in Crypto and Stablecoin Since October 2025, crypto markets have been largely bearish. This is seen in the downward trend of Bitcoin ( BTC-USD ) from its highs in the middle of the year. CRCL's declines have not only followed this but been a bit larger overall. A key turning point was President Trump's Oct. 10 announcement of 100% tariffs on China, which provoked a negative reaction in markets generally and has especially sandbagged crypto since. 6M CRCL & BTC Price Changes (Seeking Alpha) In the past six months, CRCL is down about 66%, compared to BTC's 41%. Declines in BTC likely affected other coins by forcing traders into margin calls that liquidated their other positions, causing those to be sold off too and general bearishness in crypto. For a stock like CRCL to be down, this suggests the market views these things as harmful to the company. Two things that affect Circle's top line: Volume of USDC (and other Circle stablecoins) Short-term interest rates With a larger pile of USD or higher interest rates, their business produces more yield. A decline in either hurts revenue. USDC 6M Market Cap ( CoinMarketCap ) USDC's market cap (the supply of USDC) was $64.8B six months ago. Today it is $71.5B. We see that it generally held around $75B in late 2025. The decline to $70B, some of which has already recovered, only occurred recently. Overall, Circle's yield-bearing pile of USD is intact. The main impact in this period was the Federal Reserve's three consecutive rate cuts of 25 BPS each. This could lower their net revenue as much as 25%, and the impact from distribution costs could actually mean this is lower. These cuts were already known before the end of 2025, however. The market may be eyeballing the exit of Jerome Powell as Fed Chairman in May, with Trump already naming a replacement who seems likely to support further cuts. It's also worth remembering that CRCL's lock-up period after the IPO ended not long ago . Several Form 4s have been filed in 2026, indicating dispositions by insiders. In the context of fears around the crypto market, there is coincidental selling pressure from those looking to realize gains from positions held before the IPO. Clarity Act One area worth its own mention is the Clarity Act currently being debated in Congress. This bill is a follow-up to the GENIUS Act and provides "clarity" about interest rates on stablecoins. It was introduced early in the year, and one draft specifically limits stablecoin issuers in their ability to pay interest, per SA News: "In general — A digital asset service provider may not pay any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding of a payment stablecoin," the 278-page document said. Activity-based rewards or incentives, including transaction, do not apply to this provision. Many have worried that such a limiting version of the bill would hurt the ability of stablecoin issuers to market their product. While USDC would provide liquidity on the blockchain, a lack of yield offered to customers would make it less appealing compared to a traditional bank account or money market position. Coinbase ( COIN ) CEO Brian Armstrong was critical of the main draft in mid-January, citing the restriction on interest as protecting banks from competition. Coinbase is one of Circle's major distribution partners and owns a modest stake in the stock. While this talk has spooked the market, it's already the case that stablecoin issuers are not allowed to pay interest, so Clarity would simply fail to change this. Circle does not depend on this change to make a profit or grow per se. Outlook and Impacts In my view, the market is fretting over matters that are short-term or marginal in nature. I don't worry about current rate policy, which is only near-term in impact. The fundamental question is whether one believes USDC will become a more prevalent asset in the future or not. Sufficient growth in stablecoins can overwhelm any near-term drop in revenue from rate policy. I previously mentioned industry projections about the growth of stablecoins, but I think there are other interesting trends to observe. One is the broader tokenization opportunity in all asset classes. I recently covered an upcoming SPAC merger ( CEPT ) for Securitize, Inc., which will be SECZ thereafter. It runs and operates an all-purpose tokenization platform. I made a key observation in that thesis that would concern CRCL: GENIUS provides a regulatory framework for stablecoins. Being cash on the blockchain, certainty on stablecoins makes the tokenization of other assets much more reliable and predictable for business purposes. I also rated CEPT a Buy for this opportunity, pointing to early adoption by financial institutions as customers. If we accept that more blockchain-based transactions will occur across asset classes, it follows that stablecoins (the cash in which these trades settle) will also grow in volume. This is a tailwind to Circle's revenue. This is a clear use case that does not depend on BTC whatsoever, and I think USDC's lack of a major collapse in market cap like that of BTC attests to this. Polymarket also announced it was entering a similar distribution partnership with Circle to promote USDC as the native stablecoin on the platform. As one of the largest prediction markets in the world, this is a major endorsement of their product and another demonstrated use case that does not depend on BTC. I continue to believe the CRCL is riding and accumulating long-term tailwinds to grow the base of its pyramid enough that it should overcome cyclical factors posed by rate policy at the Federal Reserve. USDT vs. USDC Market Caps ( CoinMarketCap ) Perhaps their main risk factor remains the competition posed by Tether's USD stablecoin ( USDT-USD ), which leads with a market cap of $185B over USDC's $72B. Circle is winning business because it does more to remain transparent and compliant, being the only one of the two with fully audited financials . Tether's main advantage was being a first mover. Less critically, aggressive cuts under the new Fed Chairman would sharply reduce earnings in the near term and require large growth to offset it. This could reduce the present value of CRCL's future earnings and depress the market cap further. Buyers should expect to hold a long time. Q4 2025 earnings ( scheduled for Feb. 25 ) will be an opportunity to gauge how much the rise of USDC's market cap into $70B benefits earnings, while also assessing the cumulative impact of the three cuts that occurred. Similarly, it will be a chance for management to assess the evolving industry and growth opportunity, whatever happens to rates starting in May. With CRCL at $57 per share, some of the lowest it's been since its IPO, the market cap comes to $14.5B. That's a P/E of about 21, using the annualized earnings of $698M I provided last time. It's a growth multiple, but Circle is growing, and it's been less than a year since GENIUS was passed. I believe management will confirm trends of growing use cases in their guidance later this month. Conclusion CRCL remains early in its growth. It is already profitable, scales well, and isn't burdened by debt. One simply has to bet that the most compliant USD stablecoin issuer will continue to win business and grow as more of finance becomes possible on the blockchain. With a significantly more attractive valuation provided by a cascade of market scares, I believe all the right boxes are checked and upgrade to Strong Buy.
