Written by Matt Hougan, Bitwise
Compiled by: AididiaoJP, Foresight News
Even taking into account the recent concerns raised by the CLARITY Act, I estimate, under conservative assumptions, that Circle's valuation could reach $75 billion by 2030.
One of the most frequently asked questions we get is: "How do I invest in stablecoins?"
Typically, we recommend focusing on crypto assets that support the stablecoin ecosystem, such as Ethereum, Solana, and Chainlink, or on crypto companies operating in this space, such as Circle and Coinbase. Because it's difficult to predict who will benefit most from the rise of stablecoins, some argue that investing across the entire sector is a sensible approach.
However, among the many options, one opportunity stands out: Circle—the issuer of USDC, the world's second-largest stablecoin. It is the only publicly listed company whose business is purely focused on stablecoins. In my opinion, this is the most straightforward choice.
So, is Circle a worthwhile investment?
Today is a good day to answer this question because the stock has recently fallen sharply (down 20% on Tuesday) due to news that the latest draft of the CLARITY Act imposes restrictions on platforms paying interest to stablecoin users. I think the market's reaction has been somewhat excessive.
To illustrate this point, it is necessary to examine Circle's future from a macro perspective.
Three key issues that will determine Circle's future direction
1. How large will the stablecoin market be?
The first question concerns the potential growth of the stablecoin market. Various predictions exist, the most widely cited being a research report from Citigroup. The report's "base case" scenario predicts that stablecoin assets under management will reach $1.9 trillion by 2030; the "bull market" scenario predicts $4 trillion.
The news regarding the Clarity Act has not changed the aforementioned basic predictions. To date, interest income has not been the primary driver of stablecoin growth; currently, the vast majority of stablecoins are not held in a way that generates interest. The popularity of stablecoins stems from their ability to enable efficient and reliable global fund transfers, making them suitable for various scenarios such as trade settlement, loan collateral, and as an alternative to unstable fiat currencies.
Convenience is the core value of currency, and this is precisely where stablecoins excel. Currently, the average yield on savings accounts in the United States is approximately 0.60%, and the average yield on checking accounts is approximately 0.07%. Users deposit funds in these accounts not for the purpose of pursuing returns. As the global financial system continues to migrate to blockchain-based infrastructure, I expect stablecoins to play an increasingly important role in this transformation, regardless of whether they offer interest.
In my assessment, Citigroup's baseline forecast is actually quite conservative. Nevertheless, adhering to a conservative analytical principle, we will still use $1.9 trillion as the basis for our subsequent estimates.
2. What market share will Circle's USDC capture?
Currently, USDC issued by Circle accounts for 25% of the total stablecoin market, lagging behind USDT issued by Tether.
(Why not invest in Tether? Because Tether is a private company and cannot be publicly invested in.)
Stablecoin market capitalization distribution
Source: Bitwise Asset Management, data from The Block. Data coverage period: January 1, 2020 to March 23, 2026. Note: "Other" includes BUSD, crvUSD, DAI, FDUSD, FEI, FRAX, GHO, GUSD, LUSD, MIM, PYUSD, TUSD, USDD, USDe, USDP, and USDS.
A common view is that Circle's market share will gradually decline as large institutions such as Bank of America, Stripe, and Wells Fargo enter the stablecoin field.
I have reservations about this. Historically, innovative companies have often been better able to defend their early market leadership.
For example:
- In 1976, the world's first index fund was created by the then-unknown Vanguard Group. Today, Vanguard Group is the world's leading company in passive asset management.
- In 1993, State Street launched the first U.S. exchange-traded fund (ETF), SPY, at a time when State Street was not yet a giant in the asset management industry. To this day, SPY remains one of the world's most actively traded ETFs, with assets under management exceeding $650 billion.
- In 1996, the first series of international exchange-traded funds (ETFs) were launched by an obscure asset management company called Barclays Global Investors. This company was later acquired by BlackRock for $12 billion, and its business evolved into iShares, which now manages $5 trillion in assets.
We can already see the initial signs that Circle is resisting competition from well-known companies: In 2023, PayPal, a major global digital payments company, launched its stablecoin PYUSD with great fanfare, but the product has received a lukewarm market response, and PYUSD currently has a market share of just over 1%.
Of course, there are also cases where large companies have overtaken early entrants and squeezed out pioneers. For example, in the money market fund sector, fast-moving followers such as Fidelity, Vanguard, and Federated Hermes have seized a large share of the market from the original innovator, Reserve Fund Group. This situation is noteworthy, especially considering the similarities between money market funds and stablecoins: both attract dollar funds and invest them in high-quality short-term securities such as U.S. Treasury bonds.
Nevertheless, I don't believe large banks can easily crush Circle. I think Circle's market share also has the potential to expand. After all, while Circle holds "only" 25% of the overall stablecoin market, its share in the regulated stablecoin segment is much higher (Tether's USDT primarily dominates the offshore market). Although it's difficult to obtain exact figures for Circle's share in the regulated market, I estimate it to be over 80%. If we assume that growth in stablecoin assets under management will primarily come from the regulated market (as banks, fintech companies, and large corporations tend to choose onshore, regulated stablecoins), then Circle's market share could significantly exceed its current 25% level.
However, in order to maintain a conservative approach in this analysis, I will balance the two forces mentioned above and assume that Circle will only maintain its 25% market share in the future.
3. What is Circle's profit margin level?
The last question is the most complex and crucial: How much return can Circle generate from its deposit assets?
Currently, Circle generates all interest income from USDC-backed U.S. Treasury securities. At current interest rate levels, this translates to approximately 4% annual return on its $80 billion in assets under management.
However, this figure doesn't fully reflect Circle's actual revenue-generating capacity, as distribution fees paid to acquire managed assets must also be considered. For example, USDC was co-developed with Coinbase and serves as the exchange's flagship stablecoin. Under the relevant agreement, Circle pays Coinbase all interest income generated from USDC held on the Coinbase platform, and Coinbase then distributes a large portion of that to users. Circle also has distribution agreements with other exchanges. Circle's consideration in this regard is that by paying fees for certain distribution channels, it can initiate a virtuous cycle of marketing, thereby attracting direct asset inflows. Circle can then obtain a higher percentage of revenue or realize asset monetization through other means in the future.
Overall, Circle currently pays approximately 60% of its revenue to its distribution partners. This means that, at current interest rates, its effective "collection rate" is approximately 1.6%.
Is this level sustainable? Two major factors need to be considered.
The first factor is interest rates. Circle's interest income is directly linked to the market benchmark interest rate. A Fed rate hike will benefit Circle, while a rate cut will be detrimental.
Secondly, there's the competitive landscape. Imagine a market environment with hundreds of stablecoins, where users can freely switch between USDC, WFUSD, BAUSD, PYUSD, etc. Circle's ability to maintain its interest income would be limited. From a basic economic perspective, competition will compress profit margins.
However, I am skeptical. Markets that should theoretically be "perfectly efficient" often are not in reality. Charles Schwab Corporation profits billions of dollars annually from the difference between the interest rates it pays depositors and the interest it earns from those deposits, even though customers can easily switch to higher-yielding alternatives. But customers don't always act because the core of its value proposition isn't returns, but convenience, trust, and business integration. USDC is similar in many ways: users hold USDC primarily because of its broad applicability and credibility, not interest returns. This user stickiness won't disappear anytime soon.
I would also like to point out that the current draft of the CLARITY Act may actually have a positive impact on Circle's profit margins, as the Act increases the difficulty of distributing interest income to stablecoin holders.
In summary, I believe that with increasing competition, Circle will face greater pressure on its profit margins in the future. The company may even need to adjust its revenue model, which is something Circle is currently actively pursuing. For the purposes of this analysis, I will assume its revenue share is halved to 0.8%.
in conclusion
Answering the three questions above does not encompass the full picture of Circle's business. As mentioned earlier, Circle has launched its own blockchain, continues to innovate in payment technology, and its non-interest income is growing rapidly. However, I believe that examining the company through these three questions allows for an effective 80/20 analysis of its stock value.
Based on the above conservative estimates—a market size of $1.9 trillion, a 25% market share, and a profit margin of 0.8%—revenue, excluding distribution costs and other expenses, is estimated at $3.8 billion. Currently, the company's actual operating expenses are relatively low, projected at $144 million in 2025. This means that even if these costs double or triple by 2030, approximately $2.7 billion in after-tax revenue would still translate into net profit. If valued at the current average price-to-earnings ratio of the S&P 500 (28x), Circle would be a $75 billion company.
This figure is quite significant, roughly twice the company's current value. While this performance is acceptable, given market volatility, whether it warrants further consideration is warranted.
It should be noted that I have adopted conservative assumptions at every stage of the above analysis. If stablecoin growth reaches the level expected by Citigroup's bullish scenario, or Circle's market share increases (as it has recently demonstrated), or the company is able to maintain its current collection rate or develop new revenue streams, its valuation will be significantly higher.
Overall, I can envision a scenario where Circle's value by 2030 is significantly higher than my rough estimate, but there are also scenarios where it is lower. I believe the value of this analysis lies in the fact that it shows Circle's current valuation is within a reasonable range. If stablecoin development aligns with general market expectations, then even with fairly conservative assumptions, Circle can still be considered an attractive investment.
