The stablecoin bill will be passed! When will Circle return home?

$NVIDIA(NVDA.US)$ One of the focus new stocks in the first half of the year, it can only be the first stock of stablecoins. $Circle(CRCL.US)$ ！

Since its listing, it has skyrocketed over 8 times. What exactly is a stablecoin? Why is the market crazy about it? Is there still a chance for high-profile investors who followed Circle to 'return home'? This episode of 'Futubull Insights' will tell you!

Cryptos, which everyone is likely familiar with. Recently, Wall Street has launched a new focus stock in the crypto space—Circle, the first stock of stablecoins. Although it is called the 'first stock of stablecoins', its performance is not stable. Starting from the issuance price of $31, in less than a week, it has surged over 8 times to nearly $300, but it can also drop over 25% within 2 trading days, truly like a roller coaster.

What are the investment prospects of stablecoins? Why is the market reacting so actively? Let's first understand what a stablecoin is.

A stablecoin is a type of crypto, but its price fluctuations are smaller compared to BTC, ETH, etc., because it is pegged to traditional fiat currencies (such as the Euro, US Dollar, British Pound). For example, the most widely used stablecoin in the market—Tether USDT—is pegged to the US Dollar at a 1:1 ratio, meaning that for every USDT, there is $1 in cash reserves behind it.

The uses of stablecoins can generally be classified into three categories:

As a general equivalent of cryptocurrencies: acting as a bridge between fiat currency and digital assets. For instance, USDT can be considered equivalent to the US Dollar in the blockchain, with up to 80% of Bitcoin transactions conducted through USDT.

Payment tools for cross-border trade.

Alternative currencies in inflationary regions: In high inflation countries such as Argentina, Nigeria, and Turkey, stablecoins are used as a reserve tool in US dollars to avoid the risk of local currency depreciation.

Take a look at Circle. In 2018, it partnered with Coinbase to launch the stablecoin USDC, after which it transformed into a stablecoin issuer. USDC issued by Circle is all pegged to the dollar at a 1:1 ratio. As the second largest stablecoin company in the world, how does Circle's business operate and make money?

As mentioned earlier, Circle's core business is issuing USDC, while Coinbase's role is to provide Exchange resources and promote USDC in the market. Therefore, the money Circle earns must be shared with Coinbase.

Since USDC is pegged to the dollar at a 1:1 ratio, there should be no possibility of a sudden large appreciation in coin price, so how does Circle make money?

Circle's revenue primarily relies on reserve interest. For every 1 dollar of USDC bought by users, Circle obtains 1 dollar as reserve, and then Circle invests this fund in high liquidity but low-risk Assets, such as purchasing US Treasury Bonds to earn interest. According to the first quarter performance of 2025, over 90% of Circle's revenue comes from reserve income.

ARK Investment's earlier report indicated that stablecoins are expected to become one of the most important strategic Assets of the US government in the next 5–10 years. Due to changes in geopolitical situations and the tariffs imposed by the Trump administration, foreign entities are reducing their holdings of US debt; combined with ongoing inflation, the Federal Reserve's tightening actions have not ended, thus they will not aggressively buy bonds. Stablecoin issuers hold substantial US dollar reserves and will also earn income from US bond interest, making them likely to become the big investors in US bonds in the future.

In addition to external factors, the government is also actively promoting the development of stablecoins. Earlier, the US stablecoin bill clearly stated that stablecoin reserve Assets must be backed by 100% USD and short-term US Treasury Bonds, which undoubtedly strengthens the position of the dollar and US bonds.

Strong development, besides Circle, there are many stocks in the market that have the Concept of stablecoins, and even traditional banking has started to enter this field, with a bright outlook.

However, Circle is not without its flaws. Its outlook tied to the US dollar and US Bonds is both its selling point and drawback, making it highly sensitive to interest rates. If rates are lowered, it will directly lead to a decline in the company's profits. Additionally, many Institutions began to question its value after Circle surged, with reports indicating that Circle is overvalued and that its stock price is only worth 80 dollars, while distribution costs continue to rise, causing its gross margin to decline.

Earlier, the Bank for International Settlements also warned that stablecoins do not comply with monetary principles and could pose risks to the financial system.

As the first stock of stablecoins, does Circle still have appreciation potential? For those who bought Circle at a high price, is there a chance to 'return home'? Is there a next Circle in the market worth watching? Let's listen to the experts' analysis.

Want to know more about investment opportunities in stablecoin concepts? Follow me to the "Opportunities Page" to take a look.

Go to "Discover," and you will see the "Opportunities Page." Select the corresponding topic, click to enter, and there you will find investment opportunities in stablecoin concepts that everyone can explore, along with Futubull AI insights, professional market analysis, and performances of different Stocks, which you can all refer to.

In addition to the Futubull App opportunity page that helps capture investment opportunities in the market, we will also bring you a more closely related major production to the US stock market at the beginning of the second half of the year!