After 168% IPO Surge, Is Circle Still a Buy?

"Stablecoin’s first public listing" Circle surged 168% on its IPO debut, followed by another nearly 30% gain the next day—undoubtedly a star among recent IPOs.

However, for most investors, obtaining IPO shares was not easy, leaving them to participate in the secondary market. After such a significant rally, does Circle still hold investment value?

First, Circle's core business is issuing the USDC stablecoin. In recent months, stablecoins—despite accounting for only 5%–7% of total crypto market cap—have handled roughly two-thirds of all crypto trading volume.

USDT dominates the stablecoin space with a $138.6 billion market cap and 69% market share, while USDC ranks second with $42.5 billion and a 22% share. Together, the two control over 90% of the market.

As a digital proxy for pegged assets, a key driver of stablecoin trading activity is its ease of transfer.

Stablecoin payments operate on blockchain peer-to-peer networks, bypassing traditional banking systems and costly intermediaries to enable lower-cost, faster transactions.

For instance, cross-border transfers using USDT (TRC-20 version on Tron) can incur fees as low as $0.10, while traditional bank wires often cost $30–$50 and take several days to settle. Stablecoin settlements, however, typically confirm within seconds or minutes, dramatically improving liquidity.

Both USDT and USDC are pegged to the U.S. dollar, relying on the dollar’s global dominance in trade.

They combine the monetary stability of the dollar with greater ease of payment—creating a hybrid that offers the best of both worlds.

From the U.S. regulator’s perspective, stablecoins reinforce the dollar’s status in global settlements. Moreover, as stablecoin issuers are required to hold 1:1 dollar reserves, they increase reliance on U.S. financial instruments—effectively creating a new triangle: stablecoin–dollar–Treasury, much like the former oil–dollar–Treasury system.

Circle's Business Model and Valuation: Is There Room to Grow?

According to its IPO filing, Circle profits in two main ways:

1. Interest Income from Reserves:

Circle invests customer-deposited U.S. dollars in short-term Treasuries, repo agreements, and other low-risk assets. In 2024, these reserve assets generated $1.7 billion in interest income, making this Circle’s primary profit source.

2. Ecosystem Partnerships and Fees:

Circle earns additional revenue by offering custody, settlement, and infrastructure services to banks and payment companies, charging associated fees.

For instance, Circle partnered with JPMorgan to develop digital asset infrastructure and shared USDC reserve interest with Coinbase—generating $908 million in shared revenue in 2024.

In simple terms, Circle earns through interest spread and transaction/service fees—both tied to the variable of settlement demand.

Thus, some IPO investors view Circle as a "bank in disguise," while others liken it to an exchange.

Comparable Valuations: Bank, Card Network, or Crypto Exchange?

If Circle is seen as a bank, JPMorgan trades at a P/E of 14.

If viewed as a payment settlement network, Visa trades at 43x earnings, and Mastercard at 34x.

If treated as a crypto exchange, then Coinbase is the most relevant comparable with a P/E of 43.

From a valuation standpoint, investors are clearly optimistic about Circle’s growth potential.

Circle’s IPO valuation was just over $7 billion—only a fraction of JPMorgan, Visa, or even Coinbase—suggesting ample room for expansion if its long-term model proves out.