Circle’s stock plummets 25% over two days as investors flock to this other stablecoin play

Circle’s shares were heading for a second day of big declines as the rally following its initial public offering wavered. - Justin Sullivan/Getty Images Circle Internet Group Inc. shares lost more steam on Wednesday, three weeks after the company’s splashy initial public offering, with focus now shifting to other stablecoin plays.

Circle’s stock CRCL has tumbled 24.6% over the past two trading days, while Coinbase Global Inc. shares COIN have run up 15.5% over the same stretch to close Wednesday just 0.6% away from a record high.

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The past two days mark a departure from Circle’s stunning performance since its June 5 debut.

Yet the pullback of Circle’s stock was “not surprising,” as its earlier rise was likely overdone, Peter Eberle, chief investment officer at crypto investment firm Castle Funds, said in an interview. The company’s shares hit an intraday peak of $298.99 on Monday, or roughly 10 times its IPO price, according to FactSet. They closed Wednesday down 10.8% at $198.62.

A boost for Circle on Monday was attributed in part to the announcement by fintech company Fiserv Inc. FI that it would join with Circle to develop its own stablecoin.

Enthusiasm on the regulatory front has been another factor in pushing Circle’s stock higher. The Senate last week passed a new bill that aims to regulate stablecoins, a type of crypto whose value is pegged to another asset, often the U.S. dollar. Should the bill — which now heads to the House for a vote — become law, crypto bulls see potential for it to drive wider adoption of dollar-linked stablecoins.

But for now, investors may be taking profits in Circle, as its rapid rise was “beyond fundamental sense,” according to Alexander Blume, chief executive at crypto hedge fund Two Prime.

Blume said Circle’s retreat and the relative strength of Coinbase may also suggest shares of the newly public company became overvalued.

Sean Farrell, head of digital-asset strategy at Fundstrat, echoed the point last week. “I do think at some point either Circle would come down to a more realistic valuation or Coinbase would come up to meet it,” Farrell said in a recent video for Fundstrat’s clients. “The most likely scenario is that we probably see some substantial drawdown in Circle and a rerating higher in Coinbase.”

Story ContinuesCoinbase shares some profits with Circle generated from its flagship USDC USDCUSD stablecoin.

To break down Farrell’s thesis, Circle has been paying Coinbase handsomely for its role in distributing and promoting USDC. In 2024, Circle paid $907.9 million to Coinbase, over half of Circle’s total revenue at $1.7 billion, according to public filings. For the three months that ended March 31, 2025, Circle paid Coinbase $298.8 million, over half of Circle’s total revenue of about $578.6 million for the same period.

While both Coinbase and Circle could benefit from passage of the stablecoin bill, Coinbase could face more upside if other crypto-friendly regulations were passed under the Trump administration, according to Mark Palmer, equity research analyst at the Benchmark company.

In particular, Coinbase could get a lift should the Digital Asset Market Clarity Act become law. The legislation aims to divide oversight between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission and to create a regulatory framework for crypto market structure, Palmer said. Earlier this month, the House Committee on Financial Services and Agriculture advanced the bill to the full House of Representatives.

Coinbase’s stock rallied as much as 7.1% to an intraday high of $369.28 early in Wednesday’s session, to top the Nov. 9, 2021 record close of $357.39, before pulling back to close at $355.37.

Citizens analyst Devin Ryan believes there’s still plenty of upside for Coinbase’s stock, as his $400 price target is 12.6% above current levels.

“We see a multitude of other potential multi-billion dollar revenue streams forming at Coinbase, which we anticipate can support a higher valuation from here, even after the strong move in June,” Ryan said.

Steve Gelsi contributed.

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