Why Is Circle Stock Falling?
Circle Internet Group (NYSE:CRCL) stock has had a rough month, sliding about 40 percent and now trading near $76. That’s a steep reset, but it’s worth remembering the stock listed at 31 dollars during its blockbuster June IPO and still sits more than two-and-a-half times above that level. The pullback reflects several pressures converging at once. The company’s latest quarterly results looked strong on the surface — third-quarter revenue grew 66% year-over-year to $740 million, and adjusted EBITDA improved from $126 million to $166 million. But Circle also raised its operating expense outlook for the fiscal year, and appears to have triggered a sell off. Besides this, macro dynamics have kept the pressure on.
The biggest macro driver is interest rates. There’s growing market debate about the path of U.S. rate cuts. A December rate cut looks increasingly unlikely, but 2026 still seems on track for easing as inflation cools and unemployment remains contained. Most high-growth tech names typically cheer that kind of outlook. Circle is not one of them. More than 90 percent of its revenue last quarter came from interest earned on the cash and Treasuries backing its stablecoins. Lower rates mean lower yield income, so a falling-rate environment could be a net negative.
Image by Jaydeep Joshi from Pixabay
USDC Is Core of Circle’s Business
Circle’s business remains anchored in USDC, the dollar-backed stablecoin that operates on networks like Ethereum, Solana, and Tron. USDC continues to scale rapidly. Circulation reached 73.7 billion dollars in the latest quarter, up 108 percent from a year earlier, and Circle expects long-term annual growth of roughly 40%. The expansion isn’t just a reflection of crypto trading volume. USDC is increasingly being used in cross-border remittances, B2B settlement, and international treasury flows.
Regulatory clarity is also improving. The GENIUS Act, passed in July 2025, created the first federal framework for payment stablecoins. This is a meaningful milestone: it gives banks, fintechs, and corporates a more predictable environment to integrate stablecoins into mainstream operations. Even so, USDC still trails its larger rival. Tether’s USDT dominates with a significantly higher share of the dollar stablecoin market.
Building Payment Rails
Circle is positioning itself as more than a USDC issuer by building the underlying infrastructure for next-gen payments. The Arc test net — already drawing interest from over 100 firms — is the blockchain layer where developers and financial institutions can eventually run faster, programmable money flows, potentially powered by a native token. CPN is the other half of the strategy: the off-chain payments network that already has 29 institutions signed up and hundreds more evaluating it. Arc serves as the on-chain rails, settling transactions directly on a blockchain, while CPN functions as the off-chain rails, enabling institutions to move USDC balances without relying on a blockchain for every transfer.
The move puts Circle in direct competition with payments giants like Visa (NYSE: V) and Mastercard (NYSE:MA), as well as the crypto networks it already relies on such as Ethereum and Solana. The shift is notable, as Circle would not just issue digital currency but also run the system that facilitates transactions and potentially collects fees. The challenge, however, is adoption. A network only works if enough players use it, and several others are building their own systems. Circle will need to prove that Arc is worth building on. Besides this, there are others risks, too.
A Risky Bet
While the long-term strategy is ambitious, the near term comes with meaningful risk. Stablecoin demand is historically cyclical. It rises during crypto bull markets — when trading activity is elevated — and weakens during downturns. The crypto market’s volatility makes the point clear. Coinbase (NASDAQ:COIN)., the sector’s bellwether, traded above $340 in late 2021 but collapsed to around $30 by early 2023, a drawdown of almost 90 percent. That reversal came despite Coinbase generating $7.4 billion in revenue and $3.6 billion in profit in 2021. Circle is not yet operating at that scale. For the fiscal year ending March 2025, Circle produced $1.89 billion in revenue and about $172 million in profit. A prolonged crypto downturn or a sharp decline in interest income would likely hit Circle’s stock much harder.
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