After Circle’s IPO Surge and Pullback — Buy the Dip or Exit?

TradingKey - After a blockbuster IPO, Circle—the company behind the USDC stablecoin—saw its stock price skyrocket to 8x its offering price on the first day of trading. But fast forward two weeks, and sentiment has cooled off. The stock is now consolidating around $150, leaving investors asking the big question:

Is this dip a golden entry point—or is it time to cash out and de-risk?

What Makes Stablecoins More Than Just a Crypto Fad?

While some still see stablecoins as just another crypto offshoot, they’re gaining serious traction as a potential evolution of fiat money. With benefits like instant settlement, no middlemen, near-zero transaction fees, irreversible transactions, programmability, and full transparency, stablecoins are shaping up to be a major player in global finance—not just crypto.

So, why are people actually using them?

It comes down to three things every user cares about—safety, speed, and cost. Most people don’t actually care if it’s a “stablecoin” under the hood. They care if their money arrives safely, quickly, and without high fees. As Higlobe co-founder Farman-Farmaian put it: users only care about outcomes, not what token powers that outcome.

And this is exactly where stablecoins shine—especially for cross-border payments. Because they’re pegged 1:1 to the U.S. dollar, users don’t have to worry about FX volatility. USDC, in particular, stands out. It's backed by cash and short-term treasuries—making it one of the most transparent and liquid options in the space. Compare that with USDT (Tether), which has a murky reserve mix (including loans, crypto, and even precious metals) and a history of regulatory scrutiny.

In short, USDC addresses real-world pain points in cross-border finance: it’s fast, safe, and cheap.

The Market Is Big—and It’s Getting Bigger

We’re just scratching the surface. Even if stablecoins only capture a sliver of the global financial system, the upside is massive. According to a joint report from Standard Chartered and Zodia Markets, stablecoins could account for 10% of the U.S. money supply and global FX volume by 2035.

USDC currently owns about 28% of the stablecoin market. If Circle can maintain or grow that share, its revenue could one day rival that of Visa—yes, the $600 billion payments giant.

Right now, most of the demand is flowing from emerging markets.

In regions like Africa, Latin America, and Southeast Asia, access to stable financial infrastructure is limited. From individuals looking to hedge against local currency volatility, to small businesses struggling to make cross-border payments, stablecoins (especially USDC) offer an appealing alternative.

It started with crypto-native firms moving capital around blockchain ecosystems. But now, large multinationals are paying serious attention. Use cases are evolving rapidly, and one breakout scenario tends to lead to more. Demand is compounding.

But What's the Catch? It’s Not All Smooth Sailing

Yes, stablecoins are promising—and USDC is a top contender. But Circle’s business model has its weak spots.

First, let’s talk about revenue. Circle makes money by investing the dollars backing your USDC into U.S. Treasuries and other low-risk instruments. That interest goes to Circle—not to you. So effectively, Circle gets access to billions in “zero-interest” capital. Not a bad deal—unless interest rates start heading south.

And that’s exactly what markets are anticipating. With the Fed widely expected to begin a rate-cutting cycle, Circle’s yield on those reserves could shrink fast.

Now add competition into the mix.

Some upstart stablecoins are shaking things up by offering yield directly to holders. That puts pressure on Circle’s “no-interest-to-users” model and could redirect institutional flows away from USDC over time.

There’s also a strategic pivot underway. Circle is branching out into non-USD stablecoins—including the newly launched EURC, pegged to the euro. A smart long-term move, but still early days in terms of uptake.

Then there’s the tricky part: its partnership with Coinbase.

Circle and Coinbase co-founded USDC, and under current agreements, Coinbase gets a big chunk—up to 60%—of the revenue generated from USDC, primarily for distribution and promotion. That eats into Circle’s margins in a big way.

Even more concerning? If Circle is ever unable to meet certain obligations or faces regulatory issues, Coinbase has the contractual right to become the sole issuer of USDC. That’s not just a revenue problem—it could undermine Circle’s entire role in the ecosystem.

To offset this, Circle is reportedly renegotiating its revenue-sharing structure and attempting to build its own distribution stack. Easier said than done—and whether the market will accept a new distribution pathway remains to be seen.

Conclusion

At a high level, Circle still looks positioned as a key player in the evolution of digital finance. With compliant infrastructure, institutional-grade reserves, and rising real-world utility, USDC could continue to expand across both emerging economies and enterprise use cases.

But the long-term opportunity has some near-term execution risks.

Revenue is heavily tied to interest rates and dependent on a profit-sharing model that may not be sustainable. Meanwhile, competition is heating up fast.

The IPO hype has settled—but that doesn’t mean the story’s over. This correction may be less about weakness and more about recalibration. For mid- to long-term investors, it’s an ideal window to reassess: does Circle really have the fundamentals, strategy, and moat to grow into a $600 billion narrative?

The company wants to become the “Visa of Web3.” The next chapter will show whether that’s vision—or vapor.