On June 24, the stock price of stablecoin giant Circle briefly surged to $298, with a total market capitalization exceeding $77 billion, far surpassing the market capitalization of its issued USDC stablecoin (approximately $61 billion). By the close, Circle's stock price retreated to $263.45, with a market capitalization of about $63.89 billion, still exceeding the issuance of USDC by approximately $2.215 billion.
This valuation breakthrough event has sparked widespread controversy in the on-chain community and the crypto market: Has Circle's valuation "decoupled" from USDC? Behind the high premium, is it a leap in crypto financial infrastructure or an unburst valuation bubble?
Is the market really buying into "Circle's future"?
On the surface, the rise in Circle's market capitalization reflects the market's bullish sentiment towards its "super stablecoin business":
Circle is transitioning from a stablecoin issuer to a Web3 financial infrastructure provider.
Launch the on-chain clearing protocol CCTP and establish a cooperative network with Visa, Solana, and others;
Circle Mint, compliant custody, cross-chain settlement and other services are seen as the early prototypes of the "on-chain version of Swift + PayPal".
Investors are betting not on USDC itself, but on the on-chain settlement network, enterprise payment interfaces, and compliant trading channels that Circle may control in the future.
Risk Signal: Market capitalization disconnect or exacerbation of structural vulnerabilities
However, several on-chain data analysts and cryptocurrency research institutions have pointed out that the current valuation structure has shown a significant imbalance, with Circle's stock price performance having seriously outpaced the fundamental support, hiding three major risks:
The growth of USDC is slowing down, and the basic profit model is under pressure.
According to DeFiLlama data, as of June 24, the issuance of USDC is approximately 61 billion USD, down nearly 15% from its peak in 2022. The main source of profit for USDC comes from the interest rate spread on reserve assets, and once U.S. Treasury yields peak and decline, its revenue-generating ability will face a natural decline.
If Circle is unable to establish sufficient "non-USDC revenue pillars" in the future, the current high valuation will be difficult to maintain.
The market capitalization is higher than USDC, which essentially represents the leverage of equity over stablecoins.
In traditional financial structures, if the equity value of a custodian institution significantly exceeds the scale of its managed assets, it often indicates that the market has overly optimistic expectations for its future cash flows. Once confidence reverses, the high valuation will amplify the impact of any negative news.
If Circle's stock price undergoes drastic fluctuations, it not only affects shareholder confidence but may also impact institutional users' trust in USDC—creating a "reverse transmission of value anchoring."
Circle is still facing dual pressures from regulatory compliance and reliance on DeFi.
Although Circle has been quite active within the compliance framework (including frequent communication with the U.S. Treasury and NYDFS), the extensive circulation of USDC still relies on the usage scenarios of DeFi protocols (such as Uniswap, Aave, MakerDAO) and CEX. In the event of the following situations, the valuation of USDC and Circle may face a double blow:
Large DeFi platform stops USDC support due to black swan event;
The US stablecoin regulation bill is unfavorable to Circle's structure.
Sovereign digital currency or CBDC constitutes an alternative to USDC.
Summary: Is the valuation anchor of stablecoins eroding?
Circle's market capitalization surge undoubtedly reflects the market's expectations for the central role of Web3 finance. But this also brings about a more fundamental reflection:
When the valuation of "stablecoin issuers" starts to far exceed their pegged assets, are we witnessing the formation of a crypto version of "shadow banking" logic?
But if the market buys the narrative, who will bear the systemic consequences when the narrative bubble bursts? In a highly interconnected on-chain financial world, once the valuation of the stablecoin issuer breaks, its impact will not be limited to shareholders but may affect the entire Web3 credit system.
Note: Three forward-looking signals that investors should pay attention to
Daily average changes in active USDC addresses on the chain (whether on-chain demand is increasing)
Disclosure of revenues from Circle Mint/cross-chain protocols and other non-USDC businesses
The US Stablecoin Bill and the International Settlements Organization (BIS) Regulatory Stance on Private Stablecoins Changes
At the end of the article, it is suggested that Circle's "valuation independence" has become a reality, but whether it possesses "valuation consistency" will be a question that the Web3 market must answer in the coming year.
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[Depth] Circle's market capitalization exceeds USDC issuance, triggering valuation decoupling controversies. Does this pose systemic risks?
On June 24, the stock price of stablecoin giant Circle briefly surged to $298, with a total market capitalization exceeding $77 billion, far surpassing the market capitalization of its issued USDC stablecoin (approximately $61 billion). By the close, Circle's stock price retreated to $263.45, with a market capitalization of about $63.89 billion, still exceeding the issuance of USDC by approximately $2.215 billion.
This valuation breakthrough event has sparked widespread controversy in the on-chain community and the crypto market: Has Circle's valuation "decoupled" from USDC? Behind the high premium, is it a leap in crypto financial infrastructure or an unburst valuation bubble?
Is the market really buying into "Circle's future"?
On the surface, the rise in Circle's market capitalization reflects the market's bullish sentiment towards its "super stablecoin business":
Circle is transitioning from a stablecoin issuer to a Web3 financial infrastructure provider.
Launch the on-chain clearing protocol CCTP and establish a cooperative network with Visa, Solana, and others;
Circle Mint, compliant custody, cross-chain settlement and other services are seen as the early prototypes of the "on-chain version of Swift + PayPal".
Investors are betting not on USDC itself, but on the on-chain settlement network, enterprise payment interfaces, and compliant trading channels that Circle may control in the future.
Risk Signal: Market capitalization disconnect or exacerbation of structural vulnerabilities
However, several on-chain data analysts and cryptocurrency research institutions have pointed out that the current valuation structure has shown a significant imbalance, with Circle's stock price performance having seriously outpaced the fundamental support, hiding three major risks:
According to DeFiLlama data, as of June 24, the issuance of USDC is approximately 61 billion USD, down nearly 15% from its peak in 2022. The main source of profit for USDC comes from the interest rate spread on reserve assets, and once U.S. Treasury yields peak and decline, its revenue-generating ability will face a natural decline.
If Circle is unable to establish sufficient "non-USDC revenue pillars" in the future, the current high valuation will be difficult to maintain.
In traditional financial structures, if the equity value of a custodian institution significantly exceeds the scale of its managed assets, it often indicates that the market has overly optimistic expectations for its future cash flows. Once confidence reverses, the high valuation will amplify the impact of any negative news.
If Circle's stock price undergoes drastic fluctuations, it not only affects shareholder confidence but may also impact institutional users' trust in USDC—creating a "reverse transmission of value anchoring."
Although Circle has been quite active within the compliance framework (including frequent communication with the U.S. Treasury and NYDFS), the extensive circulation of USDC still relies on the usage scenarios of DeFi protocols (such as Uniswap, Aave, MakerDAO) and CEX. In the event of the following situations, the valuation of USDC and Circle may face a double blow:
Large DeFi platform stops USDC support due to black swan event;
The US stablecoin regulation bill is unfavorable to Circle's structure.
Sovereign digital currency or CBDC constitutes an alternative to USDC.
Summary: Is the valuation anchor of stablecoins eroding?
Circle's market capitalization surge undoubtedly reflects the market's expectations for the central role of Web3 finance. But this also brings about a more fundamental reflection:
When the valuation of "stablecoin issuers" starts to far exceed their pegged assets, are we witnessing the formation of a crypto version of "shadow banking" logic?
But if the market buys the narrative, who will bear the systemic consequences when the narrative bubble bursts? In a highly interconnected on-chain financial world, once the valuation of the stablecoin issuer breaks, its impact will not be limited to shareholders but may affect the entire Web3 credit system.
Note: Three forward-looking signals that investors should pay attention to
Daily average changes in active USDC addresses on the chain (whether on-chain demand is increasing)
Disclosure of revenues from Circle Mint/cross-chain protocols and other non-USDC businesses
The US Stablecoin Bill and the International Settlements Organization (BIS) Regulatory Stance on Private Stablecoins Changes
At the end of the article, it is suggested that Circle's "valuation independence" has become a reality, but whether it possesses "valuation consistency" will be a question that the Web3 market must answer in the coming year.