After 45 days, the stock price is cut in half—Is Circle actually a “DeFi barometer”?

Original author: Eric, Foresight News

In June 2026, a seemingly promising rebound by Circle—just as it appeared to have bottomed out—came to an abrupt end. As of June 25 local time in the United States, USDC’s circulating supply had fallen to 73.6 billion, down by about $7 billion from its peak, and Circle’s stock price had also once been cut in half to around $63.

At first glance, $7 billion is less than 10% of $80 billion. But for comparison, the circulating supply of the neighboring USDT had once peaked at around 191 billion and still stands at around 186.3 billion—down by only $4.7 billion, with the reduction percentage even staying below 3%.

Although there is no evidence proving that the fall in USDC’s circulating supply is directly related to the drop in Circle’s stock price, the synchronization of the two—along with the coincidence between prior security incidents in the DeFi sector and the timing of Circle’s stock price decline—unexpectedly echoed the view Compass Point analyst Ed Engel expressed as early as this January:

Circle is a barometer of DeFi activity.

At the time, Engel believed Circle’s trading pattern is similar to cyclical stocks. From October 2025 to January 2026, the correlation coefficient between the USDC circulating supply curve and ETH’s price trend reached 0.66. The core reason was this: 75% of USDC is circulated in scenarios such as crypto exchanges and DeFi protocols, while the amount actually used for everyday consumption, cross-border payments, and other real-world use cases is far lower than people imagine.

If you look up the USDC holdings address ranking on Etherscan, the first page is filled with contract holding addresses. Those USDC reside in DeFi, exchange multi-signature wallets, cross-chain bridges, and other protocols or addresses. In addition, the top 100 USDC holding addresses on Ethereum account for more than 50% of all USDC, while just 0.32% of the holding addresses control 93.55% of the total supply. A large amount of USDC is locked inside protocols to earn yields higher than bank deposits.

This kind of concentrated ownership is absolutely not what a “digital dollar” intended for everyday circulation should look like. You might argue against this by pointing to the even higher concentration of USDT on Ethereum, but in the Web3 industry, USDT is used to pay salaries; in the foreign trade sector, USDT is used for settlements; gray- and black-market actors use USDT to evade regulation; and third-world countries use USDT to protect savings. These real-world use cases are very common.

Although not as “glamorous” as USDC, these scenarios also form USDT’s core base—and at the same time they have caused USDT, despite being the stablecoin that should be used the most as a trading pair in the crypto market, to shrink even less than the more compliant USDC during such a sluggish market. The latest report that USDT’s local price in India is trading at an 8% premium over the normal price also supports this view.

Total value locked (TVL) across DeFi has been declining since mid-April—around the time the Kelp DAO incident occurred—while Circle’s stock price has been falling since mid-May. Although the start times were separated, the subsequent trajectories are largely similar.

Just last month, Circle and Coinbase jointly pushed USDC into Hyperliquid’s position as a settlement stablecoin. The price was that it wasn’t just that each party had to stake 500,000 HYPE, but they also had to transfer 90% of the earnings from the reserve assets backing USDC on Hyperliquid. Behind this seemingly “win-win-win” situation lies Circle’s helplessness: DeFi—the main battlefield—has begun to shrink rapidly. The Kelp DAO incident dealt a heavy blow to DeFi’s credibility. And the idea of waiting for DeFi to naturally increase USDC volume has hit a bottleneck, leaving Circle to “help itself.”

If you take a closer look, you’ll find that USDC is not only Hyperliquid’s settlement asset, but also the settlement asset for platforms such as Lighter. Outside the crypto realm, Circle has also been working hard to push for USDC to be “used like dollars.” According to Artemis data, USDC’s “organic transfer volume” (i.e., excluding wash trading, high-frequency trading, exchange wallet consolidation, and so on) in 2025 was 18.3 trillion, while USDT was 13.2 trillion.

It’s undeniable that USDC is widely used for institutional and compliant payment scenarios, but the amount of USDC required for those scenarios is not as much as people might think. The flow of funds may not always take place in the form of USDC. Instead, USDC can function as an “intermediate state,” reducing the time and capital costs involved in transfers between banks or financial institutions.

In other words, increasing USDC issuance by 10 billion could, in the real world, require adding trillions of dollars in actual capital flows. But on-chain, it could simply be a few major DeFi protocols, meme coin trading platforms, or prediction markets. No matter how fast USDC circulates in the real world or how high its usage rate is, if USDC’s issuance volume can’t rise, then revenues and profits won’t grow either.

Of course, none of this is enough to effectively “sentence Circle to death.” If Circle can break free from its reliance on DeFi in the future—or prove that real-world usage has a significant driving effect on USDC issuance growth—then Circle’s investment logic could be rewritten. But in the short term, it may still be necessary to focus on whether DeFi can break the “misalignment between returns and risks” constraint and restore more confidence in the market.

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