TLDR
- Circle Internet Group (CRCL) stock jumped 17.8% Thursday as USDC circulation hit $72 billion
- New GENIUS Act gives compliant stablecoins like USDC same legal status as cash in U.S. financial system
- Federal Reserve rate cut expectations boosted crypto-related stocks after mixed economic data
- USDC adoption outpacing analyst forecasts with over 100% year-over-year growth
- Wall Street maintains Hold rating with average price target of $175.67, implying 31% upside
Circle Internet Group shares rocketed Thursday, closing up 17.8% at $133.99. The stablecoin issuer benefited from strong USDC demand and growing expectations for Federal Reserve rate cuts.
The rally pushed Circle stock to a 24.1% gain year-to-date since its June IPO. Trading volume spiked as investors piled into the crypto-adjacent play.
CRCL stock outperformed major indices by a wide margin. The S&P 500 gained just 0.8% while the Nasdaq added 0.7%.
USDC Circulation Doubles Year-Over-Year
The primary catalyst was explosive growth in Circle’s flagship USDC stablecoin. Canaccord Genuity analyst Joseph Vafi reported circulation reached $72 billion, more than doubling from last year.
The five-star analyst noted USDC is up 16% quarter-to-date alone. This adoption pace exceeds Wall Street forecasts by a considerable margin.
Vafi linked the surge to broader digital asset activity and increased crypto market usage. Circle benefits from higher transaction volumes as USDC becomes more widely adopted for payments.
The growth trajectory positions Circle to capture more revenue from its stablecoin operations. Each dollar of USDC circulation generates income through yield on backing assets.
Regulatory Tailwinds Support Growth
Thursday’s gains also reflected the recent passage of the GENIUS Act. This legislation grants compliant stablecoins like USDC the same standing as cash in the U.S. financial system.
TD Cowen analyst James Marple highlighted how stablecoins now have mainstream acceptance. The law enables faster, cheaper cross-border transactions compared to traditional payment rails.
New regulations require U.S. stablecoins to maintain full backing by safe, liquid assets. Strict audit requirements ensure ongoing compliance and transparency.
This framework should rebuild trust after past sector failures. Circle appears well-positioned to benefit from these regulatory clarifications.
Fed Policy Expectations Drive Crypto Higher
Circle stock also rode broader crypto optimism tied to Federal Reserve policy. Thursday brought conflicting economic data that ultimately favored rate cut expectations.
August Consumer Price Index came in hotter than expected at 2.5% year-over-year. However, weekly unemployment claims jumped to their highest level since October 2021.
The mixed signals put Fed Chair Powell in a challenging position for next week’s meeting. Markets now expect employment concerns to take priority, leading to rate cuts.
Lower rates typically drive investment into riskier assets like cryptocurrency and growth stocks. This dynamic boosted Circle shares as crypto sentiment improved.
Bernstein analyst Gautam Chhugani maintains an Outperform rating with $230 price target on CRCL stock. Despite competition concerns, he believes Circle’s market position remains well-defended as USDC adoption accelerates.
