After Circle’s share price fell by more than 76%, it sees a key turnaround: Can USDC become the core digital dollar infrastructure?

As of July 14, 2026 (Beijing time), Circle Internet Group (NYSE: CRCL) closed at around $63, down about 4.75%. Although the company saw its pre-market price jump more than 10% after receiving final approval from the U.S. Office of the Comptroller of the Currency (OCC) on July 10 to establish the Circle National Trust, it was then quickly hit by profit-taking.

Looking across a longer timeline, CRCL’s price action shows a more volatile profile. The stock’s 52-week high was $262.97, and the current price is down more than 76% from its peak. Year-to-date, CRCL is down about 24.8%. On July 1, CRCL also plunged 17.55% in a single day, closing at $62.63. The core catalysts behind this selloff include two events: a passive selloff triggered by Circle being removed from the Russell Growth Index, and the announcement by more than 140 institutions—including Stripe, Visa, and BlackRock—of a new stablecoin called Open USD (OUSD).

Circle’s market capitalization is currently about $15.66 billion. For a stablecoin issuer managing reserves of more than $70 billion, this valuation level reflects a deep repricing by the market of the sustainability of its business model.

The essence of Circle: a digital distribution network for the U.S. dollar

To understand CRCL’s valuation logic, you first need to understand Circle’s business essence. Circle is not a traditional “crypto company.” Its core business model can be summarized in a simple formula:

Circle’s revenue = USDC circulating supply × net spread (U.S. Treasury yields − operating costs).

By issuing USDC, which is pegged 1:1 to the U.S. dollar, Circle converts traditional dollars into digital dollars that can circulate freely on blockchains, while investing the dollar reserves deposited by users into short-term U.S. Treasuries to earn a spread return. As of July 2026, the total market cap of stablecoins worldwide is about $312 billion. Tether’s USDT leads at roughly $184 billion, while Circle’s USDC ranks second at about $73.4 billion.

In Q1 2026, Circle’s total revenue and reserve income reached $694 million, up 20% year over year, but slightly below the market expectation of $715 million. Reserve income was $653 million, accounting for 94% of revenue. However, net profit was only $55 million, down 15% year over year; operating profit fell 51.58% year over year. The divergence between revenue growth and profit decline reveals deeper structural problems Circle faces: USDC circulation is growing, but profit generated per unit of circulation is shrinking.

In Q1 2026, average USDC circulating supply grew 39% year over year, but reserve income rose only 17% year over year. The root cause is that average reserve yields fell from 4.16% in Q1 2025 to 3.50% in Q1 2026. The Federal Reserve’s interest rate environment directly determines Circle’s “gross margin”—and the interest-rate environment is changing.

A sudden reshaping of the competitive landscape: from a duopoly to a field of rivals

The competitive landscape in the stablecoin market underwent a fundamental shift in July 2026.

At the end of June, the Open Standard Alliance announced the launch of the Open USD stablecoin. The participating institutions are reportedly more than 140, including Visa, Mastercard, Stripe, Coinbase, and BlackRock. Stripe previously laid the operational groundwork for this alliance by acquiring the stablecoin platform Bridge for $1.1 billion.

Open USD’s mechanism design directly targets a weakness in Circle’s business model. In traditional stablecoins, reserve asset interest is captured exclusively by the issuer—this is the source of Circle’s 94% of revenue. Open USD adopts a “shared revenue” architecture, returning most of the reserve interest to participating institutions after deducting a small management fee, and it also removes minting and redemption fees. For large institutions, this means the economics of using Open USD may be better than using USDC.

This escalation of competition carries deeper implications. Stablecoin competition is evolving from “competition between crypto companies” into a “competition for core infrastructure among traditional financial institutions.” Visa has global payments networks, Stripe has merchant payment scenarios, and BlackRock has institutional capital resources—advantages that Circle is hard to replicate in the short term.

USDC’s trading volume edge vs. concerns over circulating supply

Despite competitive pressure, USDC still shows strong competitiveness at the trading volume level. In June 2026, the adjusted total stablecoin transaction volume hit a record $1.79 trillion, with USDC contributing about $1.21 trillion, or roughly 67%. In the first half of 2026, USDC accounted for about 70% of adjusted stablecoin transaction volume, while USDT was only 25%. As of July 7, 2026, USDC’s cumulative on-chain transaction volume has surpassed $90.8 trillion.

However, the advantage in trading volume has not translated into growth in circulating supply. USDC’s circulating supply fell by about $7 billion from its March peak, and by July it had dropped to around $73 billion. This trend is synchronized with the contraction of the overall stablecoin market—stablecoin total supply decreased by about $100 billion within two months. The $77 billion decline in June month-over-month is the largest monthly dollar drop since the Terra-Luna collapse in 2022.

The contraction in circulating supply directly affects Circle’s reserve asset base and interest income. Under dual pressure from Fed interest-rate policy and market competition, Circle faces the risk of a “volume-and-price double hit.”

The regulatory moat: the strategic value of an OCC license

Against a backdrop of intensifying competition, regulatory compliance is becoming the hardest-to-replicate moat in the stablecoin industry.

On July 10, 2026, Circle announced it received final approval from the U.S. OCC to establish Circle National Trust (First National Digital Currency Bank, N.A.). This marks the first time a stablecoin issuer officially entered the U.S. core financial regulatory system as a federal trust bank.

The strategic value of this license is reflected in three layers:

First, federal regulatory credibility endorsement. Previously, USDC mainly relied on state-level money transmission licenses and New York’s BitLicense. After the formation of Circle National Trust, its core custody business is directly under OCC federal supervision. For banks, brokerages, payment companies, and asset management institutions, the trust endorsement provided by a federal regulator is far higher than that of state-level licenses.

Second, a federal channel reserved for reserve management. Although reserve management has not yet been migrated to Circle National Trust, the license architecture is already prepared for it. Once conditions mature, the full end-to-end pipeline of USDC issuance—custody—reserve management could operate under higher regulatory standards.

Third, vertical integration capability. Circle’s long-term roadmap is becoming clearer: issue USDC → manage reserves → custody assets → on-chain settlement → cross-border payments network → provide stablecoin infrastructure services to traditional financial institutions. This “light banking” model not only aligns with stablecoins’ core characteristics of full reserves and payment attributes, but also maximizes the institutional benefits brought by federal regulation.

However, the regulatory moat is not foolproof. Mizuho Securities, after OCC approval, reiterated a “neutral” rating for Circle, noting that regulatory approval did not solve fundamental issues such as slowing USDC growth and intensifying competition. Additionally, the Open USD alliance was launched after the GENIUS Act regulatory framework was established—regulatory clarity is a double-edged sword: it raises Circle’s compliance barriers while also opening the door for large-scale entry by traditional financial institutions.

Three key variables for future growth

Circle’s future growth depends on the direction of three core variables.

Variable one: USDC market share. USDC has already established a significant advantage over USDT at the trading volume level, but its circulating supply still lags. With new competitors such as Open USD entering the market, whether USDC can maintain and expand its leading position in institutional stablecoin settlement will directly determine the size of Circle’s reserve assets. Notably, Circle has recently continued to mint USDC on the Solana network—on July 14 alone, it minted 750 million USDC; and since the start of 2026, the total minted on Solana has reached $68.26 billion. This suggests demand from DeFi and payments use cases is still growing.

Variable two: expansion of stablecoin payment applications. Circle’s future growth will come not only from crypto trading, but also from cross-border payments, enterprise settlement, and RWA (real-world asset) trading scenarios. USDC is currently operating across more than 34 blockchains, and its cross-chain transfer protocol (CCTP) is reducing friction in USDC transfers between different blockchains. If stablecoins further evolve from “trading assets” into “financial-infrastructure assets,” Circle as one of the earliest infrastructure providers could gain a first-mover advantage.

Variable three: the interest-rate environment. This is the variable most stock investors focus on. In the first half of 2026, the Federal Reserve kept the target range for the federal funds rate unchanged at 3.5%–3.75% across four policy meetings. Based on CME “FedWatch” data from July, market pricing shows a 66.3% probability that the Fed will keep rates unchanged in July, and a 33.7% probability of cumulative rate hikes of 25 basis points. If high rates persist, Circle’s reserve earnings should stay strong; but if the Fed enters a rate-cut cycle, Circle’s profit margins could face significant compression.

Conclusion

Circle is at a critical crossroads. On one hand, USDC has already captured about 70% market share in stablecoin trading volume, and the OCC federal trust bank license helps build a regulatory moat, while the average target price of $126.17 provided by 25 analysts also implies roughly 100% upside from the current stock price. On the other hand, CRCL is down about 24.8% year-to-date, USDC circulating supply has shrunk by about $7 billion from its peak, and the entrance of the Open USD alliance is fundamentally changing the stablecoin industry’s economic model.

Stablecoin industry competition has shifted from “who issues more coins” to “who can control the federally regulated infrastructure for issuance, reserves, custody, and settlement.” Circle is the first to obtain this “federal infrastructure license,” but the 140+ institutions in the Open USD alliance are building another form of moat across dimensions such as payment networks, merchant scenarios, and institutional capital.

For investors, the value judgment on CRCL ultimately comes down to two questions: how large can the market be for stablecoins as “digital dollars”? and how much of that market can Circle capture? The answer to the first depends on the macro trend of dollar digitization, while the answer to the second depends on whether Circle can continue to stay ahead in competition across regulation, technology, and business model.

FAQ

Q1: Why did Circle (CRCL)’s stock price fall sharply from its high?

CRCL has fallen more than 76% from its 52-week high of $262.97, mainly due to three factors: an overall pullback in the crypto market reduced investors’ risk appetite; USDC circulating supply has shrunk by about $7 billion from its March peak, directly impacting the size of reserve assets; and the entry of new competitors such as Open USD prompted the market to reassess the sustainability of Circle’s business model.

Q2: How big is Open USD’s threat to Circle?

Open USD is jointly launched by 140+ institutions including Visa, Stripe, and BlackRock, using a “shared revenue” model to return reserve interest to participating institutions and removing minting and redemption fees. This directly challenges Circle’s business model that relies on reserve interest revenue, but Open USD has not yet officially launched, so actual market acceptance still needs to be observed.

Q3: What does OCC approval mean for Circle?

On July 10, 2026, Circle received OCC approval to establish Circle National Trust, becoming the first stablecoin issuer to enter the U.S. core financial regulatory system as a federal trust bank. This provides USDC with a federal regulatory credibility endorsement and reserves a channel for future inclusion of reserve management under federal supervision, which is a key step for Circle to build a long-term regulatory moat.

Q4: What is USDC’s market position currently?

In June 2026, USDC handled about $1.21 trillion in adjusted stablecoin transaction volume, accounting for 67% of the market. In the first half of 2026, USDC accounted for about 70% of adjusted transaction volume. But circulating supply is about $73 billion, lower than USDT’s about $184 billion. USDC leads in trading activity, but still ranks second in terms of circulating scale.

Q5: What does the investment outlook for CRCL stock look like?

The average target price given by 25 analysts is $126.17, implying roughly 100% upside from the current stock price. However, analysts’ views differ—target prices range from $55 to $243. Circle’s future depends on three core variables: USDC market share, expansion of stablecoin payment applications, and the Federal Reserve’s interest-rate environment. Investors need to consider these factors comprehensively.