Circle: A Speculative Bubble?

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Circle Internet Group (CRCL 2.01%), a recent arrival on the public markets, has benefited, predictably, from the current fever for all things cryptographic. The company, responsible for the USDC stablecoin, enjoyed a brief period of inflated valuation, peaking at a figure that now appears, in retrospect, almost wilfully optimistic. As of late last week, the stock traded at a fraction of that height – a decline of approximately seventy-four percent. The question, then, is not whether the stock has fallen, but whether this fall presents a genuine opportunity, or merely a less spectacular path to further loss.

The Illusion of Growth

Circle’s reported revenue growth, a figure of fifty-nine percent year over year for the first nine months of 2025, is, on the surface, impressive. But numbers, divorced from context, are easily misinterpreted. The crucial detail is the source of this revenue: ninety-six percent derives from reserve income. In simpler terms, Circle profits from holding money – a practice not unknown, of course, but one that renders the company less an innovator and more a sophisticated form of banking. This model is vulnerable. A decline in interest rates, or an increase in the amount of USDC in circulation, are the levers upon which this entire structure rests. The recent doubling of USDC in circulation is not a sign of strength, but a temporary boost to income – a tide that will inevitably recede.

USDC currently occupies the second position in the stablecoin market, trailing only Tether. This is a precarious position. The market is becoming increasingly crowded, and loyalty in the digital realm is a fleeting thing. To assume continued dominance, or even sustained growth, requires a degree of faith that few rational observers can muster.

A Price Detached From Reality

The company’s earnings, while momentarily positive, are volatile. A recent profit of $214 million is hardly a guarantee of future success. More concerning is the current price-to-earnings multiple of 85. This is not merely a premium; it is a statement of expectation – an expectation that Circle will continue to grow at an unsustainable rate. To pay such a multiple is to gamble, not to invest. It leaves no margin for error, no buffer against the inevitable headwinds. It is a willingness to believe in magic, rather than to analyze fundamentals.

Such inflated valuations are not uncommon in periods of speculative excess. They are built on hope, on the belief that “this time is different.” But history suggests otherwise. Bubbles always burst, and those who remain holding the remnants are invariably left with a bitter lesson.

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The Absence of Defensibility

As the cryptocurrency landscape matures, competition will inevitably intensify. More stablecoins will emerge, each vying for market share. Circle, lacking any significant competitive advantage – any true “moat” – is ill-equipped to withstand this onslaught. It offers no unique technology, no proprietary algorithm, no insurmountable barrier to entry. It is, in essence, a commodity business disguised as a high-growth tech stock.

Those who are drawn to the allure of cryptocurrency would be wiser to consider Bitcoin. It may not offer the same potential for explosive growth, but it possesses a degree of decentralization and network effect that Circle can only envy. It is, at least, a more honest and transparent investment.

The current price of Circle stock is not an opportunity. It is a warning. A warning to exercise caution, to demand clarity, and to remember that the market, ultimately, rewards value, not hype.

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2026-01-23 04:52