Does the launch of OUSD really cause Circle's stock to plummet? Is the reason behind it really that simple?

Author: Haotian; Source: X, @tmel0211

Just because Visa, Stripe, Mastercard, and other payment giants have teamed up to launch Open USD, CRCL’s share price has recorded the largest single-day drop since listing. What exactly is wrong with Circle? Can it still be done via regular investing (DCA)? Let’s discuss my personal view:

1）I started building a position in CRCL with regular investing at around $80. The reason is that after the CLARITY Act is passed, stablecoins—especially compliant stablecoins like USDC—will become a powerful “branch” of U.S.-dollar-denominated debt. With the AI technology main theme remaining in a high-price range, I believe regularly investing in CRCL three or five years from now will likely present a trend opportunity similar to how NVDA was positioned a few years ago.

There’s no need for leverage. For this kind of trend investment, you only need to look at two points: 1) Stablecoins will inevitably become globally popular; 2) Circle is the first compliant stablecoin.

2）In the short term, the negative factors for CRCL are indeed far greater than the positive ones. This is because Circle’s main revenue comes from short-term U.S. Treasury interest income generated by USDC reserve assets. But now the market expects a rate-cutting cycle. In addition, the CLARITY Act controversially does not allow holding stablecoins that earn interest, and Circle has no choice but to share revenues with strong channels such as Coinbase and Hyperliquid—these are all short-term negatives for Circle.

Even the launch of Open USD this time is also due to market expectations that USDC’s distribution channel advantages will be further diverted. In other words, the market cannot see where Circle’s moat for stablecoin USDC actually lies, and it also cannot see where Circle’s next incremental growth will come from, nor what Circle will rely on to ensure it won’t have its market taken away by competitors.

3）So this brutal selloff is mainly the market’s early pricing of many uncertain negative factors for Circle, and it is not a direct causal relationship with the launch of Open USD or with Visa, Stripe, Mastercard, and more than 100 other institutions forming an alliance.

Because the stablecoin market share has not yet been fixed. Once the CLARITY Act is passed and institutional capital pours in at scale, the stablecoin “big pie” will grow exponentially—what does it matter if an additional channel competitor shows up? USDC still has its irreplaceable advantages. Even if the newly launched stablecoins have a stronger TradFi foundation than Circle, it will likely be even harder for them to quickly capture Circle’s share in the native DeFi market than we might expect.

Therefore, this is absolutely a selloff driven by excessive emotional reaction. It only reflects the market’s worry about not knowing where Circle’s moat is, and compared with Circle’s real fundamentals, the emotional impact seems exaggerated.

4）Once these issues are sorted out, the next steps are very clear. I will still choose to continue regular investing, set an upper limit for a certain allocation, and dynamically adjust the position based on factors such as the subsequent growth rate of USDC supply and the progress on channel renewals.

Especially around the time window before and after the CLARITY Act is passed, as the first listed company of a compliant stablecoin, CRCL’s market position remains solid. At that time, once the market’s expectations for the overall stablecoin trend become “certain,” the appropriate valuation size will naturally be reassigned back to CRCL.