Circle Internet Group (CRCL), the stablecoin giant behind USDC, entered the public markets with momentum after its June IPO. But after briefly touching highs near $300, the stock has since slid to roughly $77 amid mounting investor concerns about the durability of its revenue in a declining rate environment. With more than 95% of Circle’s income currently tied to interest earned on USDC reserves, falling yields have weighed heavily on sentiment.
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Yet even as the stock sells off, Cathie Wood’s ARK Invest is leaning in. During the week ending November 21, ARK Innovation ETF (ARKK) purchased roughly 150,000 Circle shares. Days later, on Nov. 25, ARK added another $7.6 million position, bringing the firm’s total stake to about $255 million—roughly 2% of its portfolio. Despite Circle’s seemingly rich valuation, I’m increasingly bullish on its long-term outlook, driven by a business model undergoing rapid and strategically meaningful transformation.
Circle Stock is Facing Several Short-Term Headwinds
My constructive view begins with the belief that most of Circle’s current challenges are short-term and will improve over time. One such factor is the company’s reliance on interest revenue at a time when policy rates are heading lower.
Interest-rate pressure looms largest. In Q3, Circle generated $711 million in reserve income, representing approximately 96% of total revenue. This interest income is earned by holding customers’ cash and Treasuries backing USDC in high-yield deposits with banks. However, with the Fed already delivering two cuts this year—and JPMorgan predicting another in December—market skepticism is understandable. Given this declining interest rate environment, it is easy to understand the market pessimism toward Circle as its revenue, for now, depends mainly on yields.
In addition to interest rate pressures, the market has been spooked by the IPO lock-up expiration on December 2. Following this lock-up expiration, early investors in the company can technically sell their shares in the open market. From a technical standpoint, this could create significant selling pressure in the short term.
Moreover, investors seem concerned about the notable increase in Circle’s operating expenses (the company now expects operating expenses to reach $510 million this year). The crypto market rout has not helped Circle either, though the company is less affected by this volatility than crypto exchanges and wallet operators.
Circle’s Impressive Infrastructure Pivot
What strengthens my bullish stance is Circle’s increasingly clear transformation from a yield-dependent financial entity into a diversified digital payments infrastructure provider.
The most important piece of this pivot is Arc, Circle’s compliance-native layer-1 blockchain explicitly tailored for regulated financial activities. Unlike general-purpose chains such as Ethereum and Solana, Arc is built to serve as a high-speed, low-cost settlement layer for banks and payment institutions. Its ability to settle most transactions in sub-seconds—and at fees often below one cent—positions Arc as a compelling backbone for next-generation financial rails. The idea is that since these fees are denominated in USDC, broader adoption of Arc should boost stablecoin demand and deepen Circle’s ecosystem advantages.
Circle Payments Network is another key pillar, offering banks and payment processors an alternative to the slow, capital-intensive mechanics of SWIFT transfers. SWIFT often requires multi-day settlement and expensive pre-funding of foreign accounts. Circle’s network uses real-time USDC transfers without pre-funding, enabling significantly faster settlement and improved capital efficiency. As of Q3, 29 global financial institutions had joined the program, with transaction volume reaching $3.4 billion.
Circle is also advancing blockchain interoperability through its Cross-Chain Transfer Protocol, which enables USDC to move securely between blockchains without relying on risky third-party bridging solutions.
Collectively, these initiatives point to a future in which fee-based infrastructure revenue becomes a significant—and more stable—component of Circle’s earnings mix, reducing dependence on interest income and enabling the company to command valuation multiples more aligned with fintech and software platforms.
Is Circle Internet Group a Buy, Sell, or Hold?
On Wall Street, CRCL stock carries a Moderate Buy consensus rating based on ten Buy, five Hold, and three Sell ratings over the past three months. CRCL’s average stock price target of $145.87 implies approximately 76% upside potential over the next twelve months.
Although the company appears overvalued relative to the financial services sector, I believe this premium is warranted given its infrastructure pivot, which positions it to achieve tech-platform earnings multiples over the long term.
In other words, although CRCL’s earnings trajectory puts it closer to a 60x P/E than the 30x typical for the financial services sector, I believe its premium is justified. Its infrastructure initiatives position the company to benefit from tech-platform-style scalability and margin expansion—qualities that are not yet fully priced into the stock.
My bullish stance is centered on these diversification efforts, which should eventually reduce Circle’s reliance on interest income as fee-based income grows.
Circle Eyes Digital Payments Powerhouse Status
After a strong post-IPO debut, Circle’s stock has lost momentum alongside falling interest rates. Given the company’s current revenue mix, this was inevitable. But beneath the surface, Circle is rapidly diversifying into an infrastructure powerhouse with meaningful long-term tailwinds. These developments are not yet reflected in its valuation—and ARK Invest’s aggressive accumulation suggests smart money sees the same opportunity.
I remain bullish on Circle’s long-term prospects, confident that its pivot toward high-value payments infrastructure will drive substantial earnings growth in the coming years.