Can Circle Stock Drop To $20?
Circle Internet Group (NYSE:CRCL) had a blockbuster IPO last week. While the stock was priced at $31 per share, it opened at $69 and now trades at $115 – a nearly 270% jump in just a few days. Circle is a stablecoin issuer and founded USDC, a dollar-pegged stablecoin designed to function like fiat money on blockchain networks. The token runs on blockchains such as Ethereum and Tron and is widely used in crypto trading, payments, and decentralized finance. However, Circle’s current valuation may be stretched. With earnings tied to crypto activity, interest rates, and regulation, the stock could just as easily fall to $20 or lower if market sentiment turns. For the upside case see Can Circle Stock Reach $300? In addition, Should You Pick Bitcoin Over Circle?
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Stablecoin’s Big Opportunity
Stablecoins are programmable digital currencies, typically pegged to fiat currencies such as the U.S. dollar. They combine the transparency and speed of blockchain with the price stability needed for real-world use. Circle earns revenue primarily from interest on reserves and rising stablecoin volumes. The broader crypto sector has also been gaining political momentum in the U.S. Lawmakers are advancing legislation aimed at regulatory clarity, with the Trump Administration also appearing to be pro-cryptocurrencies. A separate stablecoin bill is also in progress and could pass this summer, and this could help grow the stablecoin market considerably. Circle stands to significantly benefit if that plays out. Large companies outside of crypto are also exploring stablecoins for use in remittances, B2B payments, and e-commerce due to their speed and lower cost. However, the space is extremely volatile, and the crypto market is quite likely nearing a peak. Bitcoin trades at all-time highs of almost $110k, meaning that downside risk is higher than usual.
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Circle Stock To $20?
Sure, Circle deals in stablecoins, but that doesn’t mean it’s immune to broader boom and bust cycles that the crypto market sees. Stablecoins may be pegged to fiat currencies, but demand for them is still tied to overall market sentiment. Usage tends to rise during bull markets, when trading activity spikes, and fades during downturns. This cyclical demand affects not just transaction volumes but also Circle’s core revenue stream, which is interest income earned on reserves. When interest rates fall, or stablecoin usage drops, revenue can take a meaningful hit. Issuer stocks like Circle could also be susceptible to government scrutiny, especially as stablecoins come under the lens of financial regulators. Moreover, with Circle’s valuation having jumped from a $7 billion IPO target to over $27 billion today, any slowdown in trading activity or regulatory headwinds could pose a more meaningful downside risk.
To illustrate just how volatile the sector can be, let’s look at crypto trading bellwether Coinbase (NASDAQ:COIN). While COIN stock touched all-time highs of over $340 per share in late 2021, a few months after its IPO, it plunged to levels of around $30 by early 2023 – a roughly 90% collapse. The sell-off was driven by a broader unwinding of the crypto market and higher interest rates. Coinbase has indicated that the crypto prices are subject to multi-year cycles, which is typically two to four years. And unlike Circle, Coinbase posted $3.6 billion in profit on $7.4 billion in revenue in 2021. Circle has yet to prove it can scale to these levels. Circle’s revenue stood at $1.89 billion for the fiscal year ended March 2025, with profits coming in at about $172 million. Could Circle fall to $20? Yes. A return to its earlier $7 billion valuation implies a stock price near levels of $30. A deeper downturn in crypto or weaker interest income could push it down further. See our complete analysis for Coinbase stock