Circle 2026 New Game Plan: Why Is the Market Still Waiting for a Conclusion on the Eve of Arc Mainnet Launch?

By the end of February 2026, Circle Internet Group (CRCL) stock price remains at $83. Nine months earlier, this figure was $298.

On the surface, Circle’s fundamentals are not bad: in the 270 days after its IPO, USDC circulation exceeded $75 billion, and Q4 2025 total revenue reached $770 million, up 77% year-over-year. These numbers are still impressive in traditional finance, but the market’s valuation shows a clear divergence from the fundamentals.

Market hesitation toward Circle essentially stems from confusion over its “identity”—is it a “treasury bond fund” relying on Federal Reserve interest rates, or a tech company capable of reshaping global financial infrastructure? The answer to this question determines the valuation gap between $300 and $80.

270-Day Listing Timeline

June 2025: Circle IPOs at $31, closing the first day at $55. Wall Street labels it as the “crypto version of Nvidia,” with the narrative that USDC acts as a settlement layer in crypto, earning stable income from treasury bond interest behind each transaction.

July 2025: The U.S. House passes the GENIUS Act, giving federal legal backing to stablecoins for the first time. Circle’s stock jumps over 30% in a single day, reaching a high of $298, with a market cap surpassing $72 billion.

August 2025: Q2 earnings report shows 66% revenue growth, but distribution costs grow 74%—pressure on Coinbase’s profit-sharing structure begins to surface. The market first realizes that scale growth does not necessarily mean profit growth.

September-October 2025: The Fed cuts interest rates twice by 25 basis points each, with reserve yields down 96 basis points YoY. Circle’s core revenue source begins to shrink.

November 2025: After Q3 earnings, the stock drops 30% in a week, breaking below $70 for the first time. The dual pressure of falling interest rates and rising profit-sharing costs causes the valuation logic of $298 to collapse.

December 2025 – February 2026: Stock fluctuates between $50 and $80. The market awaits the implementation of the CLARITY Act and observes whether Circle’s platform transition can succeed.

Data and Structural Analysis

Circle’s revenue structure reveals its core dilemma. According to 2025 financials, reserve interest still accounts for most revenue, but yields have fallen from 4.5% in 2024 to 3.8%. Distribution costs totaled $1.662 billion for the year, growing in tandem with revenue—indicating unresolved structural issues with Coinbase’s profit-sharing agreement.

The fragility of this structure lies in: revenue is determined by the Fed, costs are set by Coinbase. When interest rates are high, growth masks structural problems; once rates turn, the double squeeze is directly reflected in financial reports.

From a valuation perspective, the market has always doubted Circle’s positioning as a “tech company.” Traditional tech companies enjoy pricing power and scale effects, but Circle’s unit revenue declines as scale expands—higher circulation means a larger share paid to Coinbase.

Public Opinion Breakdown

Currently, there are three main perspectives on Circle:

Bullish view: Circle’s transformation is showing results. Arc’s testnet processed over 150 million transactions in 90 days, with nearly 1.5 million active wallets and an average settlement time of 0.5 seconds. CCTP’s cross-chain protocol has handled $126 billion across 19 chains. These data point to a conclusion: Circle is shifting from “issuer” to “infrastructure collecting tolls.”

Bearish view: Transformation takes time, and fundamentals are under pressure. The rate-cut cycle is far from over; in 2025, rates have already been cut by 50 basis points, with more cuts possible in 2026. Short-term, profit-sharing agreements with Coinbase are hard to renegotiate; 60% revenue sharing persists. Additionally, rumors of Meta entering the stablecoin space add uncertainty—if Meta builds its own stablecoin, Circle’s growth story could be impacted.

Wait-and-see: Regulation is the biggest variable. The pace of CLARITY Act implementation directly affects whether stablecoins can pay interest and thus reshape industry competition. Until the law is clear, the market cannot assign a definitive premium to Circle.

Reality Check on the Narrative

The narrative that “Circle is shedding its stablecoin label” needs to be examined against facts.

Fact-based: Circle is indeed pushing for diversification. Its underlying layer is Arc blockchain, mid-layer is USYC tokenized fund, top layer includes CPN payment network and StableFX forex platform. xReserve allows other projects to issue stablecoins collateralized by USDC, serving as B2B infrastructure.

Opinion-based: Whether these layouts can translate into independent income streams unaffected by interest rates remains uncertain. Arc mainnet is expected to launch in 2026, with a window before generating substantial revenue. CCTP’s cross-chain volume is growing but has not yet altered Circle’s profit structure—financial reports show subscription and service income still in single digits.

Speculative: The market’s imagination of Circle as a “digital central bank” relies on Arc becoming the preferred infrastructure for institutions. Whether this premise holds depends on developer migration willingness, ecosystem development speed, and competition with other blockchains.

Industry Impact Analysis

Circle’s transformation efforts are influencing the competitive logic of the stablecoin sector.

For compliant stablecoins: Circle’s IPO and subsequent layout have raised industry entry barriers. Compliance costs, reserve transparency, and audit standards are becoming standard among mainstream players, not just differentiators.

For infrastructure layer: Arc’s emergence signifies stablecoin issuers moving upstream—from “printing money” to “building roads.” If this model succeeds, other stablecoin projects may follow by building their own chains, transforming the relationship between public chains and stablecoins from “parasite” to “integrated.”

For payment scenarios: AI-powered proxy payments are a new variable Circle is betting on. Circle Gateway’s dedicated features for proxy payments cost $0.00001 per transaction, with settlement times under 1 second. If AI proxy economy reaches hundreds of billions in scale, USDC could gain an early advantage in machine payment scenarios.

Potential competitors: Rumors of Meta entering the space are a key industry focus. If Meta partners with Stripe/Circle, USDC could access 3 billion users; if Meta builds its own stablecoin, USDC’s main application scenarios face direct competition.

Multi-Scenario Evolution Projection

Based on current information, there are three possible future paths for Circle:

Scenario 1: Successful platform transition (40%)

Post-Arc mainnet launch, attracting enough institutional applications, with CCTP becoming the de facto cross-chain settlement standard, and USYC’s yield assets expanding. Non-interest income in Circle’s revenue structure rises above 20%, restoring tech company valuation multiples. In this case, stock price could return to $150–200.

Scenario 2: Partial success but valuation logic unchanged (45%)

Transformation yields some revenue, but not enough to break dependence on interest rates. Market still views Circle as “treasury bond fund + options,” with valuation anchored to interest rate expectations. Stock fluctuates between $50–$100, waiting for the next rate hike cycle. This is currently the most likely scenario.

Scenario 3: Increased competition hampers transformation (15%)

Meta and other giants enter stablecoin space, directly competing in payments; or Coinbase and channel partners renegotiate profit-sharing, further squeezing Circle’s margins. Arc ecosystem development underperforms, developers migrate elsewhere. In this scenario, stock could drop to $30–$50.

Overall, the most probable scenario based on current info is Scenario 2. The market is waiting for two key variables: the regulatory framework after CLARITY’s implementation and actual adoption data after Arc’s mainnet launch.