Circle Outlook Analysis: How to View the Core Stocks of Crypto 2.0

Author: Astra; Source: X, @0xAstraSpark

How to see through both stock investment and cryptocurrency perspectives in one go—an in-depth explanation of coins and stocks! Does Circle have the potential to become the next-generation VISA/Swift? This article provides a deep analysis of Circle’s prospects, especially helping traditional stock investors gain a deeper understanding of Web3 concepts.

Regarding Circle’s latest financial report, I believe the truly impressive part is not just the EPS beating expectations, nor just the continued growth of USDC circulation, but rather how it redefines Circle’s identity: it may no longer be just a “stablecoin issuer making money from government bond interest,” but a financial infrastructure company transitioning from a “digital dollar issuance layer” to a “global programmable payment and settlement network.”

This is also why, looking at the 5-10 year horizon, Circle has the core potential to grow into a trillion-dollar market cap company.

From the latest Q1 2026 financial report, Circle’s key data are very strong: quarterly total revenue and reserve income reached $694 million, up 20% year-over-year; adjusted EBITDA was $151 million, up 24%; USDC circulation at quarter-end hit $77 billion, up 28%; on-chain USDC trading volume reached $21.5 trillion, up 263%. The company also disclosed that Arc completed a $222 million token pre-sale, corresponding to a fully diluted network valuation of $3 billion, with top investors including a16z crypto, Apollo, ARK Invest, BlackRock, Bullish, General Catalyst, Haun Ventures, ICE, Janus Henderson, Marshall Wace, Standard Chartered Ventures, and other top institutions.

Short-term financial perspective: Circle remains a highly profitable, resilient “digital dollar reserve yield company.”

Long-term strategy: Circle is trying to become the operating system of the on-chain dollar system, integrating USDC, CCTP, CPN, Arc, AI Agent payments, USYC, and other products into a complete global settlement network.

My core judgment: The probability of Circle becoming a company with a trillion-dollar market cap is already quite high. To grow into a $10 trillion company, it would need Arc, AI payments, institutional settlement networks, and USDC’s global share all to be fully penetrated—looking at a 10-year horizon, this is not impossible.

1. What exactly has Circle changed? Not just the payment front-end, but also the settlement underlying layer

Many discussions about Circle tend to see it as a “crypto version of PayPal” or a “stablecoin version of a bank.” This understanding is too narrow.

What Circle has already begun to change is the underlying logic of payments and settlements.

The core issue with traditional payment systems is that the front end appears real-time, but the back end is not. When users swipe cards, transfer money, or make cross-border payments, the interface may immediately show success, but behind the scenes involve multiple layers: bank clearing, card network authorization, batch settlements, account reconciliation, foreign exchange conversions, anti-fraud measures, compliance checks, etc. Its advantages are maturity, stability, and strong consumer protection; disadvantages include slow cross-border processing, high costs, many participants, and long settlement chains.

The efficiency advantage of stablecoins and blockchain payments is that: assets can be transferred 24/7 on open networks, settlements can be near real-time, and programmable features are available. USDC’s significance is not just as a “dollar token,” but turning dollars into assets that can flow at the protocol layer of the internet.

This is the first-principle value of Circle: transforming dollars from a part of the banking ledger system into a native settlement asset within the internet financial network.

Arc’s positioning further reinforces this. According to Circle’s disclosures, Arc is an EVM-compatible Layer 1 designed for stablecoin finance, featuring USDC as gas, low and predictable fees, sub-one-second deterministic finality, configurable privacy, and targeting payment, forex, lending, capital markets, and institutional settlement scenarios.

This means Circle’s ambition is no longer just “issuing USDC,” but to integrate USDC issuance, cross-chain transfer, wallets, payments, settlement, institutional interfaces, and developer ecosystems into a new financial infrastructure.

If Visa and Mastercard are networks for consumer payments, and SWIFT is a network for interbank messaging, then Circle aims to be the value transfer and settlement network in the stablecoin era (covering both consumer and large-value clearing).

It’s important to note: Circle has not yet truly broken the monopoly of Visa, Mastercard, and SWIFT. It is currently more like standing on an early high ground of a new settlement paradigm. Whether it can evolve from “crypto financial infrastructure” to “global financial infrastructure” remains to be validated over the next 5–10 years.

2. How to interpret the financial report? Focus on growth quality, not just revenue numbers

This financial report requires special attention to several core operational indicators.

In Q1 2026, USDC circulation at quarter-end was $77 billion, up 28%; average circulation was $75.2 billion; on-chain USDC trading volume reached $21.5 trillion, up 263%; meaningful wallets reached 7.2 million, up 47%; USDC on-platform balance hit $13.7 billion, up 254%.

This indicates three things:

First, USDC usage scale is still growing, not just a narrative overreach after IPO.

Second, Circle’s ecosystem is transitioning from “distribution via Coinbase and other channels” to “accumulation on its own platform and institutional networks.” The significant growth in USDC on-platform balances is very important for Circle, as it impacts reserve income retention and revenue sharing structures.

Third, the surge in on-chain trading volume indicates increased network activity, but this metric cannot be directly equated with Visa’s payment volume. Circle’s own disclosures note that a large part of the on-chain volume increase in Q1 comes from market-making and re-pricing activities on Aerodrome. Therefore, the $21.5 trillion on-chain trading volume is an activity indicator, but not directly comparable to Visa’s actual consumer payment volume.

From a financial structure perspective, Circle still heavily relies on reserve income. In Q1 2026, reserve income was $215k, accounting for most of the total revenue and reserve income of $215k; other income was $215k, with significant YoY growth but still relatively small.

Circle’s core business remains “USDC circulation × reserve yield × revenue retention,” but the company is trying to upgrade from a rate-sensitive company to a network-oriented one through products like Arc, CPN, CCTP, Agent Stack, USYC.

In the short term, growth potential looks good, but it’s unlikely to push Circle to a trillion-dollar valuation. More importantly, attention should be on the speed and effectiveness of ecosystem construction and deployment.

3. Is Circle now just “making long US Treasury interest”?

Not entirely.

Circle’s revenue largely comes from the yield on USDC reserves. The company discloses that USDC is 100% backed by cash and cash equivalents, mainly including Circle Reserve Fund’s short-term US Treasuries, overnight US Treasury repurchase agreements, and bank cash. The 2025 annual report also states that reserve income accounted for 96.0% in 2025 and 99.1% in 2024 of total revenue.

From a financial perspective, Circle is essentially a “digital dollar money fund + payment network” hybrid. The larger the USDC circulation, the higher the short-term dollar interest rates, and thus the higher the reserve income.

A common misconception is that Circle is simply “long on long-term US Treasuries,” but it’s actually closer to “long on short-term dollar liquidity and short-term interest rate yields.”

If the new Fed chair in the future adopts a dovish stance, refrains from rate hikes, or even pushes for rate cuts, short-term treasury yields could decline, putting pressure on Circle’s unit reserve yield. Circle’s annual report also discloses that a decline in interest rates would reduce reserve income, while rising rates would increase it. The company provided a sensitivity analysis: based on an average yield of 3.64% in December 2025, a 100 basis point increase in rates would boost reserve income by about $756 million; a 100 basis point decrease would reduce it by the same amount.

What’s less discussed in the market is: low interest rates are not purely negative. Low rates could boost risk asset preferences, promote crypto trading, on-chain financial activities, and stablecoin use cases. If USDC circulation growth can offset the decline in reserve yields, Circle’s total reserve income might still grow.

Conversely, if inflation rises and short-term rates stay high long-term, Circle’s reserve yields will benefit; but high rates could also suppress risk asset valuations and draw regulatory scrutiny over whether stablecoin issuers are “over-reliant on reserve interest spreads.”

Circle’s interest logic should not be simply understood as “rate hikes are good, rate cuts are bad.”

High rates boost short-term profits; low rates test business model upgrades. The key to Circle’s long-term valuation is whether it can expand income from “reserve interest” to “payments, settlement, developer tools, cross-chain, tokenized assets, AI payments, and network fees.”

4. Why AI payments could become a huge incremental for Circle?

AI Agent payments are one of Circle’s most promising long-term directions.

If AI Agents truly evolve from “chat tools” to “autonomous task-executing digital labor,” they will need payment capabilities. Agents need to buy APIs, call models, pay for data, invoke services, purchase computing resources, settle micro-tasks, and pay other agents. Traditional credit cards and bank transfers are not suitable for high-frequency, small, automated, cross-border, machine-to-machine payments.

AI Agent payments require several features:

• First, low cost. Many transactions could be just a few cents or less.

• Second, real-time. Agents cannot wait for traditional bank settlement cycles.

• Third, globally available. AI services and data markets are inherently cross-border.

• Fourth, programmable. Payments must be integrated with identity, permissions, risk control, task execution, and smart contracts.

• Fifth, machine-readable. AI Agents cannot rely on manual human confirmation for each transaction.

If USDC + low-cost Arc network can truly enable this narrative, it would be a significant breakthrough.

In Q1 2026, Circle launched Agent Stack, including Circle CLI, Agent Wallets, Agent Marketplace, and Nanopayments. The company disclosed that Nanopayments can support gas-free USDC transfers as low as $0.000001, suitable for high-frequency, small, machine-to-machine transactions. Circle also revealed that x402 processed $24.24 million in transactions over the past 30 days as of April 29, 2026, with 99.8% settled in USDC.

This data is still early, and it’s too soon to say “AI payments have exploded.” But it indicates that USDC is very likely to become one of the native payment currencies in the AI Agent economy.

If future AI Agent transaction volume truly grows exponentially, traditional payment networks may not be suitable for handling massive sub-cent, cross-border, automated payments. Credit card networks excel at consumer payments, dispute resolution, credit systems, and merchant acceptance, but are not designed for machine-to-machine micro-payments at every second. Stablecoins are naturally suited for this scenario.

5. Arc is a key step for Circle from “issuer” to “settlement network”

The importance of Arc is not just that it issues another token, but that it could change Circle’s revenue structure and strategic position.

The business model of stablecoin issuers is often seen as a “spread business”: users exchange dollars for USDC, Circle earns interest on reserve assets, and shares revenue with distribution channels. This model is profitable but has valuation limits constrained by three factors: interest rate cycles, regulatory policies, and channel revenue sharing.

Arc aims to address this.

According to Arc’s official documentation and white paper, it is a native stablecoin Layer 1 emphasizing low and predictable fees, USDC-denominated gas, sub-one-second deterministic finality, EVM compatibility, privacy options, institutional validators, and native integration with Circle’s product stack. The white paper also states that the Arc mainnet is targeted for launch in summer 2026, with the ARC token used for staking, governance, fee conversion, and validator incentives.

This means that if Arc succeeds, Circle could evolve from “USDC issuer” to “USDC settlement network operator.”

Issuers profit from reserve yields. The network profits from transactions, liquidity, ecosystem, developer access, and standard-setting rights.

If Arc becomes the core infrastructure for institutional stablecoin payments, RWA settlement, AI Agent payments, cross-border B2B payments, on-chain forex, and tokenized capital markets, then Circle’s valuation logic would shift from “interest rate cycle stocks” to “financial network stocks.”

Arc is still in early stages. Its testnet data looks promising, with strong institutional backing, and ARC pre-sales have attracted top capital support. But the mainnet, real transaction volume, fee income, developer ecosystem, regulatory acceptance, and institutional settlement migration all need validation—this is also one of the key points for the bullish case on Circle.

For CRCL shareholders, it’s important to note that due to blockchain token dynamics: success of Arc does not necessarily equate to a 100% increase in CRCL equity value. Value may be partially embedded in the Circle ecosystem, partially in ARC tokens, partially in USDC network effects, and partially in partner and developer ecosystems.

In any case, if Arc succeeds, it’s a huge positive for CRCL.

6. Can Circle break the monopoly of Visa, Mastercard, and SWIFT?

I believe the answer is not “immediately replace,” but “reconstruct starting from specific scenarios.”

In FY2025, Visa processed $14.2 trillion in payments, with 257.5 billion transactions and 4.9 billion payment credentials; its market cap is about $660 billion, and Mastercard’s is about $440 billion.

The moat of traditional payment networks is very deep: merchant networks, consumer habits, dispute resolution, anti-fraud, credit systems, banking relationships, brand trust, and compliance frameworks are not something a blockchain can instantly replace.

SWIFT is also not just a “slow payment network.” It’s a global interbank messaging and standards network, connecting banks, regulators, and cross-border compliance systems. Circle and Arc can change the settlement layer, but fully replacing SWIFT’s institutional network is extremely challenging.

Circle’s most likely initial breakthroughs are not in everyday card payments but in scenarios such as:

• Cross-border B2B payments, especially for SMEs’ international receivables and payables.

• On-chain transactions and crypto financial settlements.

• Institutional fund transfers and corporate treasury management.

• Instant settlement of tokenized money market funds, bonds, RWA.

• AI Agent micro-payments and machine-to-machine payments.

• Digital dollar payments in high-inflation or low-efficiency banking regions.

In these scenarios, the friction of traditional networks is higher, and stablecoins’ advantages are more apparent.

Circle’s CPN has already reflected this direction. The company disclosed that the annualized total payment volume of Circle Payments Network reached $8.3 billion, with 136 financial institutions onboarded, supporting local fiat payments in over 50 countries and stablecoin payments in more than 180 countries.

However, it’s important to note that $8.3 billion annualized TPV is still very small compared to Visa’s $14.2 trillion. But based on the above data and scenarios, it’s optimistic to expect Circle could become an important alternative layer for global settlement within 5–10 years.

7. Can Circle free itself from dependence on Coinbase and government bond interest?

Circle’s relationship with Coinbase is very close. The annual report discloses that Coinbase supports USDC usage, and Circle pays Coinbase a share of reserve income related to USDC. In 2025 and 2024, the distribution costs generated under Coinbase-related agreements were $1.4 billion and $924.5 million, respectively.

This means that although Circle is the issuer of USDC, its distribution, ecosystem, and user reach have historically been highly dependent on core channels like Coinbase. Strong channels mean issuer profits are compressed. Therefore, Circle’s diversification strategy is very necessary.

Currently, the company is working on:

• First, increasing the proportion of USDC on-platform, keeping more USDC within Circle’s own platform and institutional clients.

• Second, developing CPN to extend Circle from USDC issuance to enterprise and institutional payment networks.

• Third, developing Arc to have a native stablecoin settlement network, not just relying on other public chains.

• Fourth, expanding Agent Stack to capture developer access before the AI payments explosion.

• Fifth, developing USYC, Gateway, CCTP, forex, RWA, and developer services to increase non-reserve income share.

Early signs: In Q1 2026, other income reached $652.5M, roughly doubling YoY; USDC on-platform balances increased 254% YoY; the company’s full-year 2026 other income guidance is $150–170 million; CPN, Managed Payments, Agent Stack, and Arc are all expanding.

Objectively, it’s too early to say Circle has fully freed itself from dependence. Reserve income still dominates, other income is small, Arc is not yet mainnet mature, AI payments are early-stage, and CPN scale remains very small compared to traditional payment networks. For long-term investors, key metrics to watch include:

• Whether other income as a percentage of total revenue can rise from single digits to 10%, 20%, or higher.

• Whether RLDC margins can sustainably stay at 38–40% or higher.

• Whether USDC on-platform share can continue to increase.

• Whether CPN’s annualized TPV can grow from tens of millions to hundreds of billions.

• Whether Arc’s mainnet launches with real institutional settlement volume, not just testnet transactions.

• Whether AI Agent payments evolve from concept to sustained transaction volume and fee income.

If these indicators materialize, Circle can upgrade to a “global financial network stock.”

8. Over 5–10 years, how likely is it that Circle becomes a trillion or even ten-trillion dollar giant?

Based on CRCL’s latest roughly $131.76 stock price and the disclosed Q1 2026 share data, Circle’s current fully diluted market cap is around $35 billion. That means about a 3x increase to reach $694.1M, and roughly 28–30x to hit $1 trillion.

The management’s long-term through-cycle guidance for USDC circulation is a 40% CAGR. This is very aggressive and shows strong confidence. Optimistically, if USDC circulation grows at 40% annually, in 5 years it could reach about $414 billion; in 10 years, approximately $2.2 trillion.

The current global stablecoin market size is about $320 billion, with USDC at roughly $78 billion, and USDT still holding the largest share.

Bear market scenario: Circle is just a rate-sensitive stablecoin issuer

If future regulation tightens, USDC’s share could be squeezed by USDT, bank-backed stablecoins, PayPal, Visa, bank alliances, or CBDCs; if short-term rates decline, reserve yields will fall; if channels like Coinbase continue to cut profit shares; or if Arc and CPN fail to generate real network effects, then Circle’s valuation could stay in the $20–$50 billion range or even lower in a bear market.

In this scenario, Circle remains a good fintech company but not a super-network company.

Base case: Circle becomes one of the core infrastructures of the stablecoin era

If the global stablecoin market grows from about $320 billion to $1–2 trillion within 5–10 years, and USDC maintains a 25–35% share, then USDC circulation could reach $250–700 billion.

Even if short-term rates fall, as long as circulation grows fast enough, reserve income remains substantial.

Meanwhile, if CPN, Agent Stack, CCTP, Arc, USYC, and other businesses significantly increase other income, Circle’s valuation could shift from “interest spread financial stock” to “financial network infrastructure stock.”

In this scenario, reaching a $41.6M market cap is entirely possible. It doesn’t require Circle to replace Visa or SWIFT, only to become one of the main standards for stablecoin payments and on-chain settlement.

Bull market scenario: Circle becomes an internet financial settlement layer

If USDC becomes the core digital dollar for global enterprises, AI Agents, RWA, on-chain capital markets, cross-border payments, and institutional treasuries; if Arc becomes the mainstream stablecoin settlement network; if CPN becomes the de facto standard for bank and financial institution access to stablecoin payments; and if other income and network fees start to become profit drivers, then Circle’s valuation ceiling could expand significantly.

In this scenario, Circle could continue from hundreds of billions to $3 trillion, $5 trillion, or even higher.

But a trillion-dollar market cap requires more stringent conditions. Circle cannot just have a few trillion dollars in USDC circulation; it must become a hybrid of Visa, Mastercard, SWIFT, money market funds, on-chain settlement networks, and AI payment networks, capable of translating network scale into high profits, high retention, and high moat cash flows. Specific conditions include:

• USDC circulation reaching $1–2 trillion.

• At least one of Arc or CPN becoming a global-scale settlement network.

• AI Agent payments and machine payments becoming a real large market.

• Non-reserve income proportion increasing substantially.

• Regulatory environment allowing stablecoin systems to expand continuously.

• USDC maintaining a leading share among compliant dollar stablecoins.

• Circle reducing dependence on profit sharing with channels like Coinbase.

• The value distribution between ARC tokens and CRCL equity not harming shareholder interests.

The five- to ten-year outlook for Circle:

• Becoming a trillion-dollar company: moderate to high probability, about 40–60%.

• Reaching a $3–5 trillion valuation: moderate to low probability, about 15–30%.

• Achieving a $10 trillion valuation: low but non-zero probability, about 5–12%.

Additionally, note that the current $130+ valuation of Circle, with settlement network potential not yet fully realized, might already be somewhat overvalued based on fundamentals. It could carry a growth premium, but a safer approach might be to sell puts or wait on the sidelines.