By: Dingdang (@XiaMiPP), Odaily Planet Daily
A heated debate has recently engulfed the X community: Is Circle (NYSE:CRCL) a compelling investment opportunity? This question has starkly divided opinion into two major camps. On one side, proponents hail Circle as a valuable asset poised to capitalize on significant institutional advantages within the burgeoning stablecoin sector. Conversely, skeptics frequently scrutinize the fragility of its profit model and the inherent cyclical risks it faces. This intense clash of perspectives illuminates the divergent analytical frameworks and expectations currently applied to innovative projects in the market.
Drawing on extensive public discourse and rigorous analysis within the community, Odaily Planet Daily aims to distill the core arguments and underlying rationales from both sides. Our objective is to present readers with a clear understanding of the deeper structural divisions at play, moving beyond mere sentiment and entrenched positions.
Circle’s Tumultuous Journey: A Post-IPO Snapshot
Since its debut on the New York Stock Exchange on June 5, 2025, Circle (NYSE:CRCL) has navigated a quintessential “narrative-driven asset” price trajectory. Launching at an initial public offering (IPO) price of $64, the stock swiftly ascended to a peak of $298.9, only to gradually recede. By November 20, 2025, it had retreated to approximately $164.983, near its original offering price.
On November 12, 2025, CRCL unveiled its first full quarterly financial report post-IPO (Q3), revealing impressive figures: total revenue soared to $740 million, marking a 66% year-over-year increase, with a net profit of $214 million and an EPS of $0.64—comfortably surpassing market expectations. The primary catalysts for this robust performance were the dramatic surge in USDC circulation, which more than doubled from $35.5 billion to $73.7 billion (+108%) compared to the previous year, coupled with enhanced yields on reserve assets in a high-interest-rate environment.
However, the market’s reaction was paradoxical. Following the earnings announcement, CRCL’s stock price plummeted by 11.4% on the first day, accumulating a 20% decline over the week. Several critical factors contributed to this downturn: exorbitant distribution expenses ($448 million, consuming 60% of revenue), operating costs eroding profitability, an overreliance on non-recurring income (71% derived from fair value adjustments of investments), and the impending selling pressure from the expiration of restricted stock lock-up periods. SEC filings confirmed that the IPO lock-up concluded after the Q3 report, unleashing a substantial volume of potentially tradable shares starting November 14.
To facilitate a comparative analysis for our readers, Odaily Planet Daily has synthesized the diverse viewpoints of prominent figures such as @0xNing0x, Jiang Zhuoer, @Phyrex_Ni, @BTCdayu, and @qinbafrank, all revolving around these pivotal developments.
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1. The Profitability Conundrum: Is Circle a Bank or a Foundational Financial Infrastructure?
The Skeptics’ View: A Bank in Disguise. Jiang Zhuoer contends that Circle’s profitability fundamentally hinges on “spread-eating”—a banking-like model. Users convert their funds into USDC, which Circle then deploys into low-risk assets like U.S. Treasury bonds, earning interest. After deducting operational costs and channel commissions, the remainder constitutes its profit. The critical flaw, according to this perspective, lies in Circle’s highly unfavorable profit distribution structure. Approximately 61% of its profits are contractually allocated to Coinbase, which also independently holds 22% of the USDC market share, retaining 100% of the earnings from that portion. This arrangement leaves Circle with a disproportionately small share of the actual profits.
More alarmingly, in a declining interest rate environment, the fragility of this spread-based model would be magnified. Should Treasury rates consistently fall to around 2% while operating costs hover near 1%, Circle could face losses after accounting for channel distributions. Jiang Zhuoer argues that Circle’s current profit structure is not a testament to commercial efficiency but rather a byproduct of regulatory constraints that “prohibit issuers from directly paying Treasury interest to users.” He views this as a parasitic model, vulnerable to collapse if regulations ease or competitors bypass restrictions through incentives like rewards, rebates, or staking, thereby eroding Circle’s profit margins.
@0xNing0x provides a granular dissection of Circle’s profit dynamics, highlighting its strong correlation with three key variables: USDC issuance volume, the Federal Reserve’s benchmark interest rate, and distribution channel costs. Historical data suggests varying elasticities: volume has an elasticity of approximately 2.1, interest rates 1.9, and channel costs 1.3. This implies that changes in USDC scale exert the most significant impact on profitability. Calculations suggest that every $10 billion increase in USDC volume could theoretically generate an additional $114 million in profit, representing a substantial 21% amplification effect on profit elasticity. Both Jiang Zhuoer and @0xNing0x conclude that Circle, despite its technological veneer, operates much like a bank. They argue that the market’s tendency to value it as a tech stock, or even a “tech-bank” hybrid, is a clear mispricing that will inevitably correct.
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The Optimists’ View: Strategic Investment in Infrastructure. Countering this, @BTCdayu and @qinbafrank strongly reject the “CRCL is a bank” analogy. They assert that such a simplification is a superficial interpretation of Circle’s strategic vision.
For them, Circle is executing a classic “lose money now, monopolize later” strategy. The substantial profit sharing isn’t a forced concession but a deliberate strategic choice aimed at achieving irreversible scale, network effects, and deep user mindshare. They draw parallels to companies like Amazon, Pinduoduo, and JD.com, which endured years of losses and skepticism about their business models, only to later prove that these “losses” were strategic investments in market acquisition rather than structural flaws. Judging such companies solely by their immediate profitability, they argue, would lead to the erroneous conclusion that they “should have failed long ago.”
They posit that the stablecoin market is a prime candidate for a “winner-take-all” dynamic. Once USDC establishes an irreversible advantage in regulatory compliance and market scale, the seemingly burdensome profit-sharing costs of today will transform into powerful pricing leverage tomorrow. The current state of “seeking adoption” will evolve into “being sought for integration.”
2. The Interest Rate Precipice: Will a Deleveraging Cycle Undermine the Profit Model?
The Skeptics’ View: Rates are the Lifeline. Jiang Zhuoer and other cautious observers are unequivocal: interest rates are Circle’s lifeblood. Circle’s revenue is profoundly tied to U.S. Treasury yields, meaning any sustained downward trend in rates will systematically cap its earning potential. Even significant growth in USDC volume, they believe, would struggle to fully counteract the systemic headwinds of a declining interest rate cycle. They prefer to categorize Circle as a “financial spread play” highly sensitive to macroeconomic interest rates, rather than an intrinsically growth-driven technology company.
The Optimists’ View: Scale Trumps Rates. @BTCdayu and @qinbafrank offer a contrasting assessment: scale, not interest rates, is the paramount variable. They argue that interest rate reductions are typically gradual, not sudden collapses. Crucially, they believe the stablecoin market’s true growth explosion is yet to come. With the eventual implementation of comprehensive stablecoin legislation, a wider array of traditional financial institutions and corporate users will compliantly adopt stablecoins. This shift could propel USDC’s issuance volume from its current sub-$100 billion level into the $200-300 billion range, or even higher, within a few years.
They dismiss preoccupation with precise interest rate forecasts, such as “will rates be 3% or 2.5% next year.” Their core thesis is that as long as the growth rate of USDC issuance significantly outpaces the decline in interest rates, the overall revenue scale will continue to expand. They suggest that the market is overly fixated on the explicit variable of “interest rates,” while underestimating the more subtle yet powerful force of “compliance-driven scale migration.” Furthermore, they assert that the profit-sharing agreement with Coinbase is a “commercial negotiation outcome,” not an immutable fixture. As Circle’s market position evolves from “seeking distribution” to “being indispensable,” its negotiating leverage will naturally increase.
3. The Stablecoin War: Will Circle Be Crushed by Financial Goliaths?
The Skeptics’ View: Vulnerable to Giants. Jiang Zhuoer’s outlook on the competitive landscape is decidedly pessimistic. He anticipates that once traditional financial behemoths like JPMorgan Chase fully enter the stablecoin arena, a company of Circle’s size will struggle to compete on credit endorsement, distribution channels, and regulatory influence. More critically, these giants possess the financial might to deploy subsidies, concessions, or even operate at a loss to aggressively capture market share. In his view, Circle lacks the censorship resistance inherent in Tether (USDT) and is not irreplaceable. Should traditional institutions successfully roll out their own stablecoins, Circle could face marginalization.
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The Optimists’ View: A Moat of Trust and Compliance. @BTCdayu, @qinbafrank, and their allies counter that this perspective misjudges the fundamental logic of stablecoin competition. They argue that stablecoins are not merely financial products but archetypal “network products.” The true competitive moat isn’t capital strength but rather user mindshare, consensus on security, and high migration costs. @BTCdayu emphasizes that USDC has already forged an invisible fortress through its commitment to compliance, robust licensing, strategic partnerships, and a decade of accumulated trust. In the future, the bulk of capital will likely gravitate towards the safest and most widely recognized stablecoin. Circle’s strategic alliances with industry titans like Coinbase, BlackRock, and JPMorgan, alongside its imminent acquisition of the first U.S. stablecoin bank license, further solidify its market dominance.
They clarify that while institutions like JPMorgan are developing “deposit token” products, these are primarily internal, closed-loop systems—akin to an enterprise’s proprietary digital currency—rather than open-network stablecoins like USDC. They believe that large banks’ stablecoins are designed to serve their internal business ecosystems, not to construct a global, open clearing network. The genuine competitors to USDC will be other stablecoin systems that are equally open, compliant, and composable, not the closed assets of individual banks.
4. Compliance: A Fortress or a Fetter?
The Skeptics’ View: Regulatory Arbitrage. Jiang Zhuoer posits that Circle’s profit model is predicated on institutional advantages derived from a regulatory vacuum. A shift in regulatory frameworks, he warns, could transform these advantages into liabilities.
The Optimists’ View: The Path to Legitimacy. @BTCdayu and @qinbafrank hold a diametrically opposite view. They believe that the stablecoin trajectory will inevitably lead to a phase of “legitimization” and integration into the established financial system. Whoever achieves regulatory compliance first will be positioned to become a foundational component of national financial infrastructure. In their logic, compliance acts as a market-clearing mechanism, not a restrictive one. As regulatory gray areas are progressively eliminated, players like USDC, which have already deeply invested in compliance, stand to benefit significantly.
5. Short-Term Trading Dynamics: Lock-up Expirations and Selling Pressure
The Trader’s Perspective: Supply Overhang. @Phyrex_Ni offers a perspective rooted in short-term trading dynamics rather than long-term fundamentals. His primary concern is the immediate supply-demand structure. He highlights that CRCL has entered a substantial lock-up expiration window, with restricted shares held by executives, founders, employees, and early investors progressively becoming unlocked. While he doesn’t predict a concentrated sell-off, he views this as a classic scenario of “sudden supply increase,” creating additional downward pressure on the stock price. His stance is clear: while the current price may not be exorbitant, he is unwilling to incur “time cost + opportunity cost.” He prefers to await the resolution of these uncertainties before making an investment decision.
6. Real-World Payment Hurdles: USDC’s Structural Limitations in the U.S.
The Unseen Barrier: Tax Implications. @Phyrex_Ni raises a critical, yet often overlooked, issue: USDC’s tax classification in the United States. He points out that under U.S. tax law, USDC is not treated as “cash” but rather as an “asset.” This distinction carries a significant implication: every transaction involving USDC could potentially trigger a capital gains tax calculation. This inherent tax attribute, he argues, makes USDC fundamentally unsuitable for widespread retail payment adoption in the U.S. Even if regulatory pathways become completely clear, unless tax laws are amended, large-scale consumer-to-business (C2B) payments with USDC are almost impossible to achieve.
In his assessment, this structural limitation will cap USDC’s payment potential within the domestic U.S. market, relegating it primarily to business-to-business (B2B) transactions, cross-border settlements, and financial back-end operations, rather than enabling it to become true “digital cash.”
7. Long-Term Potential: Cyclical Play or Structural Opportunity?
The Long-Term Bull: Untapped Trillions. @qinbafrank epitomizes the long-term bullish perspective. His logic is straightforward: the stablecoin market represents an enormous, largely untapped sector. The journey from hundreds of billions of dollars today to several trillion dollars in the future is not a far-fetched fantasy. He believes that in a market with tenfold growth potential, leading and aspiring leading companies naturally command a premium. While Circle may not be the undisputed market leader, it is arguably the most compliant and institutionally palatable player in the space.
From his vantage point, the market’s true task is not to obsess over short-term volatility, but to identify which companies within this structurally growing sector are best positioned to participate in the “final wave of centralization dividends.”
Conclusion: Navigating the Dichotomy of Short-Term Risks and Long-Term Vision
The adage holds true: the more affordable an asset becomes, the more diligently it warrants research, rather than facile dismissal. Currently, bears highlight a confluence of immediate structural risks: prohibitive distribution costs, a precarious reliance on interest rate movements, the looming supply overhang from lock-up expirations, and the potential disruptive impact of evolving tax and regulatory frameworks. Conversely, bulls are placing their bets on profound, long-term structural tailwinds: the global migration towards digital settlement, the inexorable institutionalization of compliant stablecoins, and the eventual emergence of network products as quasi-infrastructural pillars once fully established.
It is undeniable that for the foreseeable future, Circle may face an uphill battle in surpassing Tether’s market dominance. Yet, it is equally true that new entrants will find it exceedingly challenging to swiftly replicate the comprehensive compliance pathways, extensive channel networks, and deep institutional trust that Circle has painstakingly cultivated. The debate over CRCL’s intrinsic value and future trajectory thus reflects a fundamental tension between immediate vulnerabilities and a compelling long-term vision for the future of finance.
(The above content is an authorized excerpt and reprint from our partner PANews, original link | Source: Odaily Planet Daily)
Disclaimer: This article is for market information purposes only. All content and opinions are for reference only and do not constitute investment advice. They do not represent the views and positions of BlockTempo. Investors should make their own decisions and transactions. The author and BlockTempo will not bear any responsibility for direct or indirect losses resulting from investor transactions.
