Circle rebounded nearly 17% in two days; the real rise may not be driven by fundamentals.

Cryptocurrency-driven stock price rebound prompts Arc to adopt a long-term outlook.

Original title: Circle shares surge 16% in two days amid cryptocurrency rally. This is where the stock might be headed in 2026. Original author: Wiltone Asuncion
Compiled by: BlockBeats

Editor's Note: From August 19th to 20th, the stock price of stablecoin issuer Circle rose by approximately 16.7%. During the same period, Bitcoin broke through $70,000, US Treasury yields fell, and crypto-related stocks generally strengthened. News such as the White House meeting with crypto industry executives and the increase in USDC's market share further boosted market sentiment.

This rebound is largely driven by sector-wide performance. Circle's own fundamentals remain mixed: while USDC circulation and on-chain transaction volume continued to grow in the second quarter, revenue growth has slowed, with over 85% of revenue still coming from interest generated by reserve assets. Whether the expansion of USDC can offset the decline in reserve yields as interest rates fall will be crucial to short-term profitability.

Longer-term variables include the Arc blockchain and the Circle Payment Network (CPN). The Arc public mainnet is scheduled to launch on September 16th, with institutions such as BlackRock, Visa, Mastercard, and DTCC participating in verification or related business integrations. Circle hopes to leverage this to expand its revenue from transactions, settlements, and software services, while reducing its reliance on reserve interest.

The $259 valuation presented in this article corresponds to a neutral scenario in 2030, significantly higher than the Wall Street average target price of approximately $101. The former already incorporates the commercial success of Arc and CPN, while the latter is primarily based on reserve income, interest rate environment, and recent performance over the next 12 months. Which valuation Circle ultimately receives depends on whether Arc can generate real assets, trading activity, and sustained revenue after its launch.

The following is a translation of the original text:

Circle's stock price rose 9.56% on August 19, closing at $78.59; the following day it rose another 6.45%, closing at $83.66, for a cumulative increase of approximately 16.7% over two days. On August 21, Circle continued to rise, rising 5.16% to close at $87.98.

The continued rise indicates a significant improvement in market sentiment. However, this article argues that the market performance in the first two trading days was primarily driven by rising Bitcoin, falling US Treasury yields, and strong performance in crypto-related stocks; Circle itself has not exhibited any major fundamental changes sufficient to explain this surge.

The stock rose nearly 17% in two days, mainly driven by the cryptocurrency market.

From August 19th to 20th, Bitcoin broke through $70,000, US Treasury yields fell, and crypto-related stocks generally rose. Circle's stock price is more sensitive to crypto market sentiment, thus recording a larger increase.

Circle's historical stock price retracement. Despite a cumulative increase of approximately 16.7% from August 19th to 20th, the stock price has still fallen significantly from its previous high. Source: TIKR

The White House meeting with crypto industry executives, USDC's increased market share, and Circle's quarterly earnings Q&A session also provided additional support for the stock price. Overall, improved risk appetite in the sector remains the primary driver of this rally.

Two days of price action are not enough to confirm a reversal in Circle's fundamentals. When Bitcoin rises and interest rate expectations shift towards easing, the market tends to give Circle a higher valuation; however, its stock price may also experience significant volatility once the crypto market cools down or US Treasury yields rise again.

Compared to short-term market trends, Circle's acquisition of a portion of IBM's blockchain patent assets on July 27th has greater long-term significance. This acquisition covers over 680 patent families and nearly 1,000 granted patents, spanning areas such as blockchain, banking, insurance, enterprise infrastructure, and secure cloud services.

Circle stated that following the acquisition, the company becomes the largest holder of blockchain patents in the United States, and these intellectual property rights will be used to support the development of USDC, CPN, and Arc. The patent portfolio will help strengthen Circle's technological reserves, but it is unlikely to directly translate into revenue or profit in the short term.

USDC growth remains rapid, but revenue is beginning to slow.

Circle announced its second quarter 2026 results on August 5. Total revenue and reserve income for the quarter were $701 million, up 7% year-over-year; net income from continuing operations was $48 million; and adjusted EBITDA was $143 million, up 8% year-over-year.

USDC-related business metrics maintained rapid growth:

• The circulating supply of USDC at the end of the quarter was $73.3 billion, a year-on-year increase of 19%;

The average quarterly circulating supply reached $76.5 billion;

• On-chain transaction volume reached $14.8 trillion, a year-on-year increase of 151%.

While USDC usage continued to expand, revenue growth remained relatively limited. Circle's total revenue in the second quarter increased only slightly from $694 million in the first quarter, and the year-over-year growth rate also slowed significantly compared to previous quarters.

Circle's quarterly revenue and year-over-year growth. Total revenue and reserve income for the second quarter were $701 million, up 7% year-over-year, a slower growth rate than before. Source: TIKR

Interest rates are a key variable. Circle primarily allocates its USDC reserve assets to short-term U.S. Treasury bonds and cash-like assets, thereby generating interest income. The reserve yield fell to 3.48% in the second quarter from 4.14% in the same period last year, offsetting some of the gains from the increase in USDC circulation.

Circle's current profitability is still dominated by two variables: the circulating supply of USDC determines the size of its reserve assets, and short-term interest rates determine the yield on those reserve assets. As long as interest income remains a significant proportion of total revenue, interest rate cuts will continue to depress the income generated per unit of USDC.

Arc is expected to drive Circle's platform transformation.

Circle aims to expand its software and network services revenue through Arc and CPN, while gradually reducing the weight of reserve interest in its revenue structure.

The Arc ecosystem comprises participants from sectors including asset management, banking, payments, trading, and blockchain infrastructure. The public mainnet is scheduled to launch on September 16th. Source: Circle

Arc is Circle's native stablecoin blockchain, with its public mainnet scheduled to launch on September 16. Circle claims that over 100 institutions and ecosystem projects have already participated in its development, with initial validators including BlackRock, DTCC, Visa, Mastercard, ICE, Standard Chartered, and MoneyGram.

BlackRock is expected to deploy its tokenized money market fund BUIDL on Arc, and DTCC plans to explore tokenizing its custodial securities and integrating them with Arc. These collaborations bring institutional endorsement to Arc, but large-scale adoption and stable revenue are still some way off.

Circle CEO Jeremy Allaire positions Arc as a financial infrastructure serving on-chain enterprises, tokenized assets, and AI-powered agent payments. According to this plan, Circle will generate revenue from trading, settlement, software, and network services, and its business model will gradually expand from stablecoin issuance to an on-chain financial platform.

In the second quarter, Circle completed a $242 million pre-sale of Arc tokens, with related revenue to be recognized gradually as product milestones are achieved. Driven by this, the company raised its 2026 other revenue guidance from $150 million to $170 million to $310 million to $330 million, and simultaneously increased its revenue margin (RLDC Margin) guidance (excluding distribution costs) from 38% to 40% to 41.7% to 43.7%.

Token pre-sales can boost non-reserve revenue in the short term, but their sustainability remains to be seen. Whether Arc's business model can succeed ultimately depends on its ability to continuously attract assets, transactions, and developers after the mainnet launch, thereby generating stable service revenue.

CPN is also in the early stages of commercialization. The payment network's annualized payment volume was approximately $15 billion at the end of Q2, rising to $23 billion by the end of July. Commercialization is expected to begin in the second half of 2026. While payment volume has grown, revenue conversion still needs to be verified in subsequent financial reports.

The $259 valuation factored in the platform transformation in 2030.

TIKR estimates Circle's valuation at approximately $259 by the end of 2030 under a neutral scenario. Based on the $83.66 share price used in this article, the potential cumulative return is approximately 210%, with an annualized return of approximately 30% over the next 4.4 years.

TIKR's neutral scenario estimates Circle's share price at approximately $259 by the end of 2030. This result is based on assumptions such as continued growth of USDC and the gradual commercialization of Arc and CPN, and is not a consensus 12-month price target from Wall Street. Source: TIKR

This figure comes from TIKR's long-term valuation model, and is not based on Circle management guidance or Wall Street's consensus target price for the next 12 months. The model is built on the following assumptions:

• The circulating supply of USDC maintained a compound annual growth rate of approximately 40% throughout the entire cycle;

By 2030, the global stablecoin market is projected to expand to between $1 trillion and $4 trillion.

Arc and CPN are gradually contributing substantial non-reserve income;

More USDC remains within Circle's own infrastructure, leading to lower distribution costs and higher profit margins.

The average Wall Street target price listed in this article is approximately $101, about 21% higher than $83.66. The two valuations differ significantly in their time horizon and business assumptions. Analysts' short-term targets primarily consider reserve income, interest rate changes, and recent performance; the $259 scenario pre-emptively incorporates Circle's successful transformation into an on-chain financial infrastructure platform.

Therefore, $259 is closer to a long-term optimistic scenario. If Arc grows into a major settlement network for tokenized assets and smart payments, Circle has the opportunity to be rated as a platform company; if network usage and business revenue fall short of expectations, interest rates, USDC size, and crypto market sentiment will still dominate its evaluation.

After September 16th, business revenue will be the benchmark.

Whether Arc can launch as planned on September 16th is Circle's most pressing question. However, the mainnet launch and institutional participation only complete the first step towards commercialization; further validation through actual business data is still needed.

The market needs to pay attention to the following next:

• Whether institutions such as BlackRock and DTCC have integrated real assets and transactions into Arc ;

Can Arc 's transaction volume, active addresses, and fee revenue continue to grow?

Whether CPN can generate stable payment and network revenue after commercialization;

Can the proportion of non-reserve income in total income be increased?

Whether USDC's growth in size and platform revenue can offset the pressure on reserve income caused by interest rate cuts remains to be seen.

If Circle discloses continued growth in on-chain assets, transaction activity, and business revenue in its subsequent financial reports, its platform transformation will gain more solid evidence, and its long-term evaluation is expected to be further improved.

If Arc 's post-launch progress remains focused on the list of participating institutions and partnership announcements, with limited revenue contribution, Circle's stock performance will continue to heavily rely on interest rates, USDC circulation, and crypto market sentiment. The recent nearly 17% two-day gain largely reflects the market's renewed trading of its growth expectations, and the platform's transformation still awaits validation.