Market Analysis: Circle's pricing logic is outdated, with still 80% upside potential

Author: Lucas Shin

Compiled by: Deep Tide TechFlow

Deep Tide Insights: The market treats Circle as an interest-rate-sensitive money market fund, but USDC supply still grows by 72% when rates fall. Even more overlooked is the AI agent commerce wave: McKinsey projects that agent transactions will reach $3–15k by 2030, while out of the $106M transaction volume in HTTP payment standard x402, 99.6% is settled in USDC. This is a structural opportunity in stablecoin demand, not a pure bet on yields.

Conclusion:

The market prices Circle as an interest-rate-sensitive money market fund—betting that Fed funds rates sit on the blockchain rail. We believe this framework misprices the business. USDC supply grows 72% to $75.3B in 2025; even if the Fed cuts rates by 75 bps in the second half, it shows that USDC demand is driven by real utility adoption rather than purely yield-seeking behavior. Our base case forecasts that by 2030 the total stablecoin market reaches about $150k, with average USDC supply of $284B. Even if reserve yields are expected to compress, we expect Circle’s reserve revenues to grow to $9.2B by 2030 (about 3.5x from 2025), because supply growth overwhelms yield compression. Combined with Circle Payment Network (CPN) expanding to $350M in revenue, distribution costs fall from 60% to 55%. In our base case, total revenue is $9.8B in 2030 and net revenue is about $1.8B.

A few tailwinds support this trajectory: the GENIUS bill creates a favorable federal stablecoin framework for compliant issuers; the Circle Payment Network gains early traction, with 55 financial institutions registered, annualized transaction processing volume of $5.7B, and provides a transaction-based revenue stream that diversifies interest-rate sensitivity. Stablecoin adoption expands in B2B payments, cross-border settlement, and DeFi. Our base case produces a forecast 2030 EPS of $6.73, implying a target price of about $168 assuming a 25x terminal P/E (based on end-of-period valuation), which is an upside of about 83% from the current level.

Comparable companies list:

There are no direct publicly traded comps as stablecoin issuers monetizing reserves through “float.” Our peer set covers companies that share key attributes with Circle: float-based revenue models (Charles Schwab, Interactive Brokers), digital payments infrastructure (PayPal, Wise, dLocal, Bill.com), crypto-native platforms (Coinbase), and high-growth infrastructure with usage-based economics (Snowflake, Confluent).

What does Circle do?

Circle is the issuer of USDC, which is a dollar-denominated stablecoin pegged 1:1 to the U.S. dollar. When users deposit dollars, USDC is minted; when they redeem, it is burned. The yield generated by reserves (approximately 43% in reverse repos, 43% in Treasury bills, and 14% in bank deposits, held by The Bank of New York Mellon and managed via BlackRock’s USDXX fund) makes up Circle’s primary revenue.

Key cost structure details: Coinbase is the main distribution partner for USDC, receiving 100% of the reserve revenue for the USDC reserves held on its platform, and 50% for USDC outside its platform. In 2025, Coinbase receives $1.35B, representing 51% of Circle’s total reserve revenue. Including non-Coinbase distribution (12.7%), total distribution costs consume about 61% of reserve revenue, leaving a 39% gross margin. We forecast distribution costs to decline from 60% to 55% by 2030 because non-Coinbase distribution grows. New financial institution, bank, and custody partners will negotiate transactions more favorable to Circle than its current agreement with Coinbase. This drives gross margin expansion from 39% to 54%.

Beyond reserve revenue, Circle’s most important growth lever is the Circle Payment Network (CPN), a cross-border B2B settlement network built on USDC. CPN launched in May 2025, has 55 registered financial institutions, annualized transaction processing volume of $5.7B, and a pipeline of 500 financial institutions. We forecast CPN to expand to $175B in transaction processing volume by 2030, with a 0.2% fee (consistent with a blended cross-border fee of 20 bps), generating $350M in transaction-based revenue. This revenue stream is not sensitive to interest rates, diversifying Circle away from reliance solely on reserve yields. Additional revenue lines (called “Other revenue” in our model) include CCTP (cross-chain bridging transaction volume, 47–50%) and Arc settlement infrastructure; we forecast $207M in total by 2030.

Thesis #1: Supply growth overwhelms rate compression

The total stablecoin market expands from about $137B in 2022 to about $308B in 2025. Our model forecasts about $50k by 2030, a CAGR of about 37%. Today, total stablecoin supply outstanding (about $316B) represents about 1.4% of the $15k U.S. M2 money supply. Our base case implies about 6%, still a modest share of U.S. dollar-denominated liquidity.

We forecast USDC maintains 22–25% market share (down modestly from 24.8% due to white-label and bank stablecoin partitioning space), generating $338B of USDC supply by 2030 (about 4.5x growth from today). Put simply, even if Circle’s effective reserve yield declines, the pure supply growth of USDC from $63B to an average $284B is enough to offset it. As a result, reserve revenue grows 3.5x from $2.64B to $9.24B.

Thesis #2: Agent commerce will drive the next wave of stablecoin demand

AI agents are moving toward a path of executing transactions autonomously by 2030. McKinsey forecasts global agent commerce sales of $3–23k by 2030; Gartner estimates that by 2028 AI agents will mediate more than $15k in B2B procurement. Structurally, these transactions require a stablecoin rails layer:

Stablecoins are becoming the settlement layer for this emerging agent economy, and Circle’s business model expands accordingly. When agents hold USDC in their wallets to fund autonomous transactions, Circle earns yield on every dollar sitting in these reserves. The larger the USDC pool held by agents, the larger the revenue base—regardless of transaction frequency.

USDC is already the default stablecoin for agent payments. Since gaining traction via the x402 payment standard (HTTP native micropayments), in the six months since, it has processed about 17.7M transactions and about $106M in transaction volume. Over 99.6% of transactions settle in USDC.

First-mover advantage creates a flywheel: new builders default to supporting USDC because it has the deepest integrations, which further deepens integrations and makes alternatives harder to displace. In our base case we do not model agent revenues, but agent demand as upside optionality is embedded in our bull case scenario. If even 1–2% of McKinsey’s low-end $30k forecast settles on the USDC rail, that implies $30–60B in incremental USDC float in agent wallets, and Circle could earn passive yield from it.

Valuation and scenarios

We use the terminal P/E based on our 2030 forecast EPS to value CRCL. Our base case produces $1.84B in net income on 273.9M diluted shares, resulting in EPS of $6.73. A 25x terminal P/E—above the comparable weighted average, reflecting Circle’s structural growth trajectory, CPN-driven revenue diversification, and its regulatory moat—implies about $168 per share in 2030, an upside of about 83% from the current level.

A 25x multiple sits between roughly 15x at JPM and roughly 38x at Coinbase, fitting high-growth infrastructure transitioning into recurring, interest-rate-insensitive income.

Base case: Assuming supply growth and CPN expansion continue to execute, the stablecoin market reaches $2.27M and USDC maintains a 22.5% share. Distribution costs decline modestly to 55% because negotiations with new financial institution partners lead to a lower revenue share. Exiting at a 25x terminal P/E on 2030 forecast earnings implies a target price of $168.34—82.7% upside, and a 16.3% internal rate of return.

Bull case: Assuming accelerated stablecoin adoption driven by favorable regulation, CPN network effects, and broad traditional financial access. The total stablecoin market reaches $50k and USDC captures a 30% share. Distribution costs compress to 50% because non-Coinbase origination expands. Exiting at a 35x terminal P/E on 2030 forecast earnings implies a target price of $482.10—over 423% upside, and a 51.2% internal rate of return.

Bear case: Assuming stablecoin adoption slows; white-label stablecoins erode USDC’s market share to 20%, and rate cuts compress reserve yields to 2.75%. CPN attractiveness disappoints. Exiting at a 15x terminal P/E on 2030 forecast earnings implies a target price of $46.92—about 49% downside, and a -15.5% internal rate of return.

We believe management quality is above average in the crypto infrastructure space, with particular advantages in navigating regulation (49-state MTL, first MiCA compliance).

Jeremy Allaire co-founded Circle in 2013 and serves as Chairman and CEO. A serial entrepreneur (former Macromedia CTO, founder/CEO of Brightcove, with a 2012 IPO), Allaire shifted Circle from a consumer payments app to stablecoin infrastructure. He launched USDC with Coinbase in 2018. After SPAC failure in 2022, he completed a traditional IPO on the NYSE in June 2025.

Heath Tarbert serves as President, promoted from Chief Legal Officer in January 2025. Tarbert is a former Chairman and CEO of the CFTC (2019–2021), former Assistant Secretary for the U.S. Treasury, and former Chief Legal Officer at Citadel Securities.

Jeremy Fox-Geen has served as CFO since January 2021. Previously CFO at iStar/Safehold (NYSE-listed REITs) and North America CFO at McKinsey & Company. He oversees Circle’s IPO and manages the reserve structure for USDC outstanding of more than $70B.

Dante Disparte serves as Chief Strategy Officer and Head of Global Policy and Operations. Previously Founder and Executive CEO and Vice Chair at Diem Association (Meta’s stablecoin project), where he led global regulatory strategy, public policy, market expansion, and international operations.

The main management risks are founder concentration and overly high equity incentives post-IPO (over $500M in 2025, including $424M in IPO-related RSU accelerations), which are currently normalizing (equity incentives in Q3 and Q4 2025 are $59M and $48M, respectively, trending toward below a $200M annualized run rate).

White-label and platform-native stablecoins

The most underestimated risk to USDC market share is platforms, major applications, and financial institutions launching their own branded stablecoins. For example, Hyperliquid has USDH, PayPal has PYUSD, Fidelity has FIDD, and JPMorgan Chase has JPMD. Recently, Polymarket launched “Polymarket USD,” which is currently USDC-wrapped but could be a stepping stone toward independent settlement. If this strategy expands under the GENIUS bill framework, USDC could gradually lose its position as the default settlement rail. Our base case forecasts USDC market share declining from 24.8% to 22.5% by 2030 to reflect this fragmentation.

Mitigating factors: White-label stablecoins still require reserve infrastructure, compliance, and—most importantly—deep liquidity. Given USDC integration across every major exchange, wallet, DeFi protocol, and bridge, a new branded stablecoin would need to replicate that liquidity network to operate as an independent settlement token. Deep liquidity pools, tight spreads, and instant redeemability are hard to launch. Fragmented stablecoins with weak liquidity create worse execution for users. The conversion cost to start fully independent reserves is high enough that most platforms may never complete the transition.

Interest-rate sensitivity of federal funds

Reserve revenue is directly tied to interest rates. With forecast average USDC of $284B in 2030, every 100 bps cut translates to roughly a $2.8B loss in total reserve revenue. If the Fed cuts rates to 2.0%, forecast reserve revenue in 2030 would decline by 25–30% versus our base case. Kalshi estimates the probability that markets price in additional rate cuts beyond 2027 at 63%.

Mitigating factors: Even at a 2.5% yield, average USDC of $284B generates $7.1B in reserve revenue, which is still 2.7x the $2.64B earned at the 4.19% yield in April 2025. Supply growth overwhelms all scenarios except the most extreme interest-rate case.

Single-product concentration and Coinbase dependence

USDC reserve revenue accounts for more than 96% of 2025 revenue. Coinbase controls about 67% of U.S. crypto exchange share and receives 51% of reserve revenue. As mentioned above, if Coinbase launches its own stablecoin, aggressively renegotiates terms, or if regulatory friction slows USDC supply growth, the entire revenue base is at risk.

Mitigating factor 1: Given that Coinbase earns $1.35B annually from its arrangement with Circle, with nearly zero balance-sheet risk, it seems unlikely they would launch a competing stablecoin. If they did, they would need Coinbase to build the regulatory infrastructure and liquidity that Circle has spent years establishing.

Mitigating factor 2: For years, the market has made similar critiques of Visa (that it is a single-product business), but Visa’s value-added services generated more than $10.9B in 2025 (up 24% year over year), showing reduced reliance on interchange fees. We believe CPN is Circle’s key diversification lever. By end of 2030, we forecast CPN to generate $350M in transaction-based revenue (about 4% of total revenue), which is both not sensitive to interest rates and independent of the Coinbase relationship. Over time, institutions and B2B USDC origination that bypass Coinbase should also organically lower blended distribution costs.

Tether resilience and competitive landscape

USDT’s supply is currently close to 2.5x that of USDC, and Tether is actively closing the regulatory gap exploited by USDC. In January 2026, Tether launched USAT, a stablecoin issued in compliance with the GENIUS bill framework via Anchorage Digital Bank (OCC-regulated), giving Tether a path into previously locked U.S. institutional markets. If Tether successfully runs a dual strategy (USDT for global liquidity and USAT for U.S. compliance), USDC’s regulatory moat would be materially narrowed.

Mitigating factor: The competitive landscape is nuanced. USDT dominates trading on centralized exchanges outside the U.S. and remittances in emerging markets, while USDC dominates DeFi collateral (Aave, Compound, Uniswap default choice), U.S. institutional adoption, cross-chain bridging (CCTP accounts for 47–50% of bridge transaction volume), and B2B payments (2025 $235B, up 733% year over year; USDC accounts for about 65%). These are effectively different products serving different total addressable markets. That said, our thesis is based on stablecoin market expansion rather than market-share growth at the expense of Tether. Both stablecoins will grow significantly.

Disclosure: This material is for reference only and does not constitute investment advice, financial advice, trading advice, or any other form of recommendation. The views expressed are solely those of the author and should not be taken as advice to buy, sell, or hold any asset. The author or associated entities may hold positions in the discussed assets. You should conduct your own research and consult appropriate financial professionals before making any investment decisions.