Circle Just Shocked Wall Street—And It Could Be the Biggest Stablecoin Moment Yet

Circle Internet Group delivered a breakout fourth quarter , crushing Wall Street expectations and sending shares up roughly 15% in early trading as investors reassessed the earnings power of the stablecoin model. The company behind USDC reported Q4 EPS of $0.43, well ahead of consensus estimates that ranged from $0.16 to $0.25 depending on the source. Revenue and reserve income totaled $770 million, up 77% year over year and above estimates near $745 million, while adjusted EBITDA came in at $167 million, up 412% from a year ago. After a 23% year-to-date decline and a stunning 77% drop from its post-IPO highs, the report marks a potential turning point in sentiment.

To understand the significance of the quarter, it helps to understand Circle’s business model. Circle issues USDC, a dollar-pegged stablecoin backed by cash and short-term U.S. Treasuries. Unlike Bitcoin, which is volatile and speculative, USDC is designed to hold a steady $1 value. Circle earns most of its revenue by investing the reserves backing USDC into low-risk assets and capturing the yield. In other words, it monetizes stability and scale.

That scale is accelerating. USDC in circulation grew 72% year over year to $75.3 billion at the end of Q4, though it did come in slightly below some consensus estimates around $77 billion. More striking was transaction activity: USDC on-chain volume hit $11.9 trillion in Q4, up 247% year over year, and meaningful wallets rose to 6.8 million. That surge in usage translated directly into reserve income of $733 million, up 69% from the prior year. The quarter confirms that adoption, not just interest rates, is driving growth.

Revenue less distribution cost (RLDC) margin improved to 40%, up from 39% in Q3 and 30% a year ago, highlighting improving operating leverage. Adjusted EBITDA margin came in at 54%, reflecting the capital-light nature of the business. However, costs are rising alongside scale. Total distribution, transaction, and other costs climbed to $461 million, up 52% year over year, and GAAP operating expenses nearly doubled to $254 million, partly due to IPO-related stock-based compensation and higher payroll taxes. Even so, adjusted operating expenses grew at a more manageable 32%, and the core earnings trajectory remains strong.

Regulatory momentum is also becoming a structural tailwind. The GENIUS Act, signed into law last year, provides a federal framework for dollar-pegged stablecoins, and Circle recently received preliminary approval to establish a national trust bank charter. Those developments reduce regulatory uncertainty and position USDC as a compliant digital dollar alternative for enterprises and institutions. Partnerships with Visa and integration into real-world payments and treasury workflows further legitimize its use case.

One natural question for crypto investors is what this means for Bitcoin? Stablecoins and Bitcoin serve different purposes. Bitcoin is a store-of-value and speculative asset; stablecoins like USDC are transactional rails. In some cases, rising stablecoin usage can support Bitcoin liquidity by providing a bridge between fiat and crypto markets. However, in periods of risk aversion, investors may rotate from volatile assets like Bitcoin into stablecoins, which could contribute to short-term Bitcoin weakness. That said, the surge in USDC circulation likely reflects broader digital asset adoption rather than outright substitution.

In fact, the sympathy move in Coinbase shares, up about 4% premarket following Circle’s results, suggests that investors see stablecoin growth as constructive for the broader crypto ecosystem. More USDC in circulation generally means more trading liquidity, settlement efficiency, and institutional engagement. Rather than replacing Bitcoin, stablecoins may be strengthening the infrastructure layer beneath it.

Looking ahead, Circle reiterated its expectation of a 40% compound annual growth rate in USDC circulation over the cycle. For fiscal 2026, the company guided to other revenue of $150 million to $170 million, above consensus near $143 million, and an RLDC margin of 38% to 40%, roughly in line with 2025’s 39%. Adjusted operating expenses are expected to rise to $570 million to $585 million, reflecting continued investment in growth initiatives such as Arc mainnet, CPN total payment volume expansion, and momentum in EURC and USYC.

One key variable remains interest rates. Reserve income benefits from higher yields on Treasuries and cash equivalents. In Q4, reserve return rates declined by 68 basis points year over year, partially offsetting the benefit from higher circulation. If rates decline meaningfully, Circle’s revenue growth could moderate unless circulation continues to expand at a rapid clip. That dynamic makes volume growth the most important long-term lever.

Ultimately, the quarter demonstrated three things: strong execution, accelerating adoption, and improving operating leverage. Circle beat on EPS, revenue, EBITDA, and margins while reinforcing multi-year growth targets. The stock’s 15% rally reflects relief that the post-IPO hangover may have run its course and renewed confidence in the durability of the stablecoin model.

Whether this marks a sustained re-rating will depend on regulatory follow-through, rate trajectories, and continued USDC adoption. But for now, Circle has reminded the market that in a volatile crypto world, stability—when scaled properly—can be very profitable.