Circle Internet Group (NYSE:CRCL) experienced an impressive IPO last week. The stock was initially priced at $31 per share, opened at $69, and is currently trading at $115 – which is a nearly 270% increase in just a few days. Circle is a stablecoin issuer and created USDC, a dollar-pegged stablecoin intended to operate like fiat currency on blockchain networks. The token operates on blockchains such as Ethereum and Tron and is extensively used in cryptocurrency trading, payments, and decentralized finance. However, Circle’s current valuation might be overstretched. With earnings linked to cryptocurrency activity, interest rates, and regulation, the stock could just as likely drop to $20 or even lower if market sentiment changes. For the upside case, see Circle Stock To $300? Also, check out What’s Better – Circle Stock Or Bitcoin?
Stablecoin’s Significant Opportunity
Stablecoins are programmable digital currencies, usually pegged to fiat currencies like the U.S. dollar. They offer the transparency and speed of blockchain technology alongside the price stability necessary for practical applications. Circle generates revenue mainly from interest on reserves and increasing stablecoin volumes. The wider crypto sector has also been gaining political traction in the U.S. Legislators are promoting laws that seek regulatory clarity, and the Trump Administration has also shown support for cryptocurrencies. Additionally, a standalone stablecoin bill is currently in the works and could potentially pass this summer, which might significantly expand the stablecoin market. Circle stands to benefit considerably if this comes to fruition. Major companies outside the crypto space are also investigating the use of stablecoins for remittances, B2B payments, and e-commerce because of their speed and lower costs. However, the market is highly volatile, and the crypto landscape is likely approaching a peak. Bitcoin is trading at all-time highs of nearly $110k, indicating that the potential for downside risk is greater than usual.
Could Circle Stock Go To $20?
Certainly, Circle is involved in stablecoins, but that doesn’t mean it’s shielded from the broader boom and bust cycles evident in the crypto market. Stablecoins may be pegged to fiat currencies, but their demand is still linked to overall market sentiment. Adoption tends to rise during bull markets, when trading activities surge, and diminishes during downturns. This cyclical demand impacts not just transaction volumes but also Circle’s fundamental revenue stream, which consists of interest income from reserves. When interest rates drop or usage of stablecoins declines, revenue can experience a significant hit. Stocks of issuers like Circle could also face governmental examination, especially as stablecoins come under scrutiny from financial regulators. Furthermore, with Circle’s valuation soaring from a $7 billion IPO target to over $27 billion today, any decline in trading activity or regulatory challenges could present a more substantial downside risk.
To demonstrate how volatile the sector can be, let’s examine the crypto trading benchmark Coinbase (NASDAQ:COIN). While COIN stock reached all-time highs exceeding $340 per share in late 2021, a few months post-IPO, it fell to approximately $30 by early 2023 – representing roughly a 90% drop. This sell-off was triggered by a broader unwinding of the cryptocurrency market and rising interest rates. Coinbase has indicated that cryptocurrency prices are influenced by multi-year cycles that typically last two to four years. Unlike Circle, Coinbase reported a profit of $3.6 billion on $7.4 billion in revenue in 2021. Circle has yet to demonstrate that it can scale to these levels. Circle’s revenue was $1.89 billion for the fiscal year that ended in March 2025, with profits around $172 million. Could Circle drop to $20? Yes. A return to its previous $7 billion valuation suggests a stock price near $30. A more significant decline in crypto or weaker interest income could push it even lower. See our complete analysis for Coinbase stock
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