Circle Stock Surges 347% on Third Trading Day

Circle, the issuer of the USDC stablecoin, experienced a significant surge in its stock price on its third trading day, reaching a record intraday high of $138.57. This marked a substantial increase of 347% from its initial public offering (IPO) price of $31. The stock's value has more than quadrupled, reflecting strong institutional and retail interest.

Major investors, including SBI Holdings and ARK Invest, have shown considerable interest in Circle. SBI Holdings invested $50 million in the company, securing one of the largest allocations of Circle shares. ARK Invest, led by Cathie Wood, purchased 4.48 million shares of CRCL on Circle's opening day, trimming its positions in other companies like Robinhood, Coinbase, and Block to do so. ARK's flagship ETFs now hold a combined total of 4,431,862 CRCL shares, which could result in an unrealized gain of over $524 million if the firm acquired the shares at the IPO price.

In addition to these significant investments, multiple exchange-traded funds (ETFs) have been filed to track Circle's performance. ProShares filed for an Ultra CRCL ETF, which aims to double the gains or losses of the stock on a given day. Meanwhile, the Bitwise CRCL Option Income Strategy ETF is designed to generate income for investors by selling call options on CRCL shares.

However, Circle's revenue model, which relies heavily on interest earned from the cash backing its stablecoins, could be adversely affected by potential rate cuts. A rate cut by the Federal Open Markets Committee could negatively impact Circle's earnings, as lower interest rates would reduce the interest income generated from its cash reserves. Analysts have noted that every 25 basis point cut in interest rates could reduce Circle's 2026 EBITDA by $100 million, according to the analyst's forecast.

Despite these potential challenges, Circle's stock has continued to attract significant institutional interest, indicating a strong belief in the company's growth prospects within the stablecoin and cryptocurrency sectors. The surge in Circle's stock price highlights the growing enthusiasm and investment in the digital asset space, as well as the potential for further growth in the stablecoin market.