Circle Internet Group (CRCL): A Bear Case Theory

We came across a bearish thesis on Circle Internet Group on Just Value’s Substack. In this article, we will summarize the bears’ thesis on CRCL. Circle Internet Group's share was trading at $83.46 as of January 13th. CRCL’s forward P/E was 84.03 according to Yahoo Finance.

Circle Internet Group, Inc. operates as a platform, network, and market infrastructure for stablecoin and blockchain applications. CRCL illustrates the dilemma facing a listed fintech whose financial performance hinges more on macro forces than on its own strategy. As the issuer of USDC and EURC—fully reserved, regulated stablecoins that underpin large parts of the tokenized-money economy—Circle occupies a critical position in global digital finance. USDC has become a widely adopted payment stablecoin across blockchains, exchanges, wallets, and institutional platforms, making Circle indispensable to the future of programmable financial infrastructure.

Yet the equity story is far more complex. Circle’s revenues are dominated by interest income generated from the reserves backing its stablecoins. This means growth depends primarily on two variables entirely outside its control: short-term interest rates and the aggregate supply of USDC in circulation. When rates are high and stablecoin demand rises, revenue surges. When either declines, revenue falls—regardless of the quality of Circle’s strategic decisions or operational execution.

A third external factor further complicates the picture: economics shared with distribution partners such as Coinbase and Binance. These partners control major on- and off-ramps for USDC, giving them significant leverage in negotiations over revenue-sharing arrangements. The more economics Circle gives up to maintain distribution reach, the less value flows to shareholders, even if overall ecosystem adoption grows.

This dynamic creates a structural tension. Circle is systemically important in the stablecoin landscape, benefiting from scale, brand trust, regulatory progress, and institutional integration. But as a public company, it remains unusually exposed to macro rate cycles, crypto sentiment, and partner bargaining power—factors that can overshadow its long-term strategic initiatives and cloud visibility into sustainable value creation.

Previously we covered a bullish thesis on PayPal Holdings, Inc. (PYPL) by Sergey in May 2025, which highlighted improving margins, strong EPS growth, and momentum across Braintree, Venmo, and BNPL. The company's stock price has depreciated approximately by 14.71% since our coverage. This is because near-term sentiment didn’t play out. The thesis still stands as execution remains solid. Just Value shares a similar but emphasizes on Circle’s macro-driven model.

Circle Internet Group is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held CRCL at the end of the third quarter which was 39 in the previous quarter. While we acknowledge the potential of CRCL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.