Summary Circle Internet Group now trades near its IPO price, entering value territory despite rapid business growth. USDC reserve income remains resilient as circulation growth more than overcomes expected Fed rate cuts. Other revenue streams, including EURC, USDY, and ARC blockchain, are experiencing hypergrowth and could become highly material quickly. Recent stock declines are disconnected from fundamentals, offering significant upside and optionality for opportunistic investors. Circle Internet Group, Inc. ( CRCL ), after a post-IPO meteoric rise of more than 280%, has now fallen back to Earth, trading near its IPO price of $69/share at the time of this writing. This puts the stock squarely in "value" territory despite the rapid growth expected from its underlying business. Circle Stock Price USDC Reserve Income Resistant to Rate Cuts The lion's share of Circle's income comes from one source - interest on the US dollar reserve that backs the issuance of USDC stablecoin. And as I pointed out in my previous article about Circle , this line item is resistant to rate cuts from the Fed, as any interest rate reduction is more than offset by the rapid growth of USDC. Let's test this claim a little further with the latest data. Per their Q3 earnings release , USDC in circulation was $73.7B, but it has since grown further to $75.2B based on real-time data as of writing. I'll use this as an approximation for the 2025 year-end number. USDC has been growing at a 3-digit clip, coming in at 108% as of Q3. Despite this, management conservatively guided to 40% CAGR, while noting on the conference call that the industry expects a growth rate of 60% from USDC. In this analysis, I will consider 3 scenarios: Base Case of 40% growth from management's conservative guidance, Expected Case of 60% from industry research, and Best Case of maintaining 100% growth, which is a possible outcome given the recent regulatory clarity from the GENIUS Act leading to accelerated adoption of USDC (the world's largest regulated stablecoin) by the mainstream economy. In terms of distribution margin, Q3 came in at 39%, and management guided to 38%. This margin is Circle's income net of distribution costs, and it is expected to expand over the long run, because as USDC's market position strengthens and they diversify its base of distributors, Circle's negotiation power should increase. That said, I will conservatively apply the 38% number from management. For the Reserve Return Rate, I will use the US Treasury yield curve for estimation: US Treasury Yield Putting it all together, here's what I expect over the next 3 years: Projected USDC Reserve Income As you can see, not only is reserve income resistant to rate cuts throughout the cycle, it is expected to expand 2x to 7x during the period after distribution costs. At Circle's current market cap of $17B, it is trading at 6x 2028 net reserve income under the base case scenario, and 2x under the best case scenario - putting it in deep value territory. Gangbuster Growth from "Other Revenue" Circle has multiple other income sources aside from USDC reserves. They are the issuer of EURC - already the world's largest EUR-backed stablecoin despite its nascent market value of $325M. And they also issue yield products such as the USDY. They are the operator of the ARC blockchain, putting them in competition with Ethereum and Solana but with the advantage of being stablecoin-native. CEO Jeremy Allaire has some very ambitious goals for it, calling ARC the "Economic OS of the Internet". Perhaps most importantly, USDC is getting a lot of traction in integrating with the real economy and getting accepted as payment - a trend that is accelerating since the GENIUS Act, which I covered in more detail in my previous article. From a very low base, "Other Revenue" as a whole grew a mind-boggling 50,000% in Q3 year-over-year to $28.5M. For the full year, management raised its guidance for other revenue to $90-100M, which implies an astronomical growth rate that may not be sustainable in the long run. At this early stage of hypergrowth, it's very difficult to accurately model what this line item will look like in a few years. However, even as the growth rate comes back down to a more pedestrian triple-digit (which is very achievable given the traction they're getting from various initiatives), one can see that the other revenue line is expected to become very material to Circle's business very quickly - most certainly within 2-3 years' time. Conclusion Circle's stock price has recently dropped precipitously in sympathy with a correction in the larger crypto market, and perhaps exacerbated by an expected insider lockup expiration . However, neither event has any material impact on Circle's underlying business in the long, medium, or even short term. USDC's circulation will outgrow any expected effects from the Fed's rate cuts. Reserve income from USDC alone is enough to justify Circle's current valuation. In addition, investors brave enough to build a position in Circle during this period of market pessimism are rewarded with a free option on Circle becoming a full-fledged financial institution serving multiple facets of the digital economy.
