Behind Circle's Strong Stock Price Rebound: AI, Prediction Markets, and Institutional Adoption

Original | Odaily (@OdailyChina)

Author | Wenser (@wenser 2010)

Recently, following the release of its Q4 2025 financial report, the stock price of "the first stablecoin stock," Circle (CRCL), experienced a long-awaited strong rebound, surging over 45% in two days and briefly touching $90 today, marking a new high since November of last year. In a crypto concept stock market that had been in a persistent downtrend, Circle (CRCL) momentarily stole the spotlight. Major institutions and analysts have begun their own cheerleading, with many traders even boldly proclaiming once again that "Circle's stock still has tenfold potential."

Behind the fervent enthusiasm, the market is perhaps more focused on the underlying drivers of this price rebound, as this directly determines whether Circle's (CRCL) stock price rise can continue. Odaily will provide a brief analysis of this issue from the perspectives of Circle's business performance, institutional views, the AI "ticket," and the prediction market, attempting to clarify the key question of where Circle's next wave of growth will come from.

Transformation of Circle's Business Fundamentals: From Stablecoins to Internet Financial Infrastructure

When mentioning Circle, many people's perception of it may still be stuck in the stereotypical impression of "the perpetual runner-up in the stablecoin race." However, judging from its 2025 performance and data growth, Circle's stablecoin USDC is rapidly catching up with Tether's stablecoin USDT.

Circle's Recent Report Card: USDC Transaction Volume Reached $18.3 Trillion in 2025, Ranking First in the Industry

According to Artemis website data, global stablecoin transaction volume surged 72% year-over-year in 2025, reaching a record $33 trillion; among them, the transaction volume of USDC issued by Circle reached $18.3 trillion, ranking first; in contrast, Tether's USDT transaction volume was only $13.3 trillion.

Moving into 2026, the scale of USDC transaction counts remains exceptionally robust: In early February, Circle CEO Jeremy Allaire stated in a post that according to Artemis data, the on-chain transaction count for USDC in January exceeded 8.4 trillion, while the total on-chain transaction count for the stablecoin market was 10 trillion. In terms of on-chain transaction count, USDC accounted for 84% of the total market share. In other words, in an unnoticed corner, USDC's transaction activity has been quietly climbing. Not only that, the growth rate of USDC's circulation is also accelerating rapidly. As of local time February 12, USDC issuance increased by approximately 2.6 billion tokens within a week.

For comparison, the market cap of the "stablecoin leader" USDT declined 0.8% in February to $183.61 billion, continuing the approximately 1% decline trend from January, marking the first consecutive two-month contraction since the Terra incident in 2022.

Finally, looking closely at its 2025 fiscal year performance report, Circle's USDC circulation at the end of 2025 was $75.3 billion, a year-over-year increase of 72%; Q4 2025 USDC on-chain transaction volume was $11.9 trillion, a year-over-year increase of 247%; Q4 total revenue reached approximately $770 million, a sharp increase of 77% compared to the same period last year; total revenue and reserve income for the 2025 fiscal year were $2.7 billion, a year-over-year increase of 64%. Although its net loss from continuing operations reached $70 million, this was mainly affected by high IPO-related equity incentive expenses of $424 million. However, Circle expects USDC circulation to maintain an annual growth rate of approximately 40% in the future and projects that other business revenue (excluding reserve income) will reach approximately $170 million in 2026, higher than the approximately $110 million in 2025.

Personally, I speculate that the growth in USDC circulation and transaction count may be jointly driven by factors such as crypto payment demand from AI Agents, the continuously rising transaction volume in prediction markets, and institutional business demand following the passage of the GENIUS Act regulatory bill. We will elaborate on this point later.

Overview of Institutional Views: Some Are Buying the Dip, Others Still Believe Circle Will "Outperform the Market"

Currently, the market shows a clear divergence regarding Circle's future stock price performance: some investment institutions continue to buy the dip and accumulate shares; others are optimistic about its business model upgrade, transitioning from a stablecoin to a fintech infrastructure provider; yet some research institutions believe this stock price rebound is primarily driven by short squeezes and lacks sustainability.

Bernstein: Circle Stock Price Targets $190, Maintains "Outperform" Rating

Bernstein pointed out that Circle is no longer viewed merely as a proxy investment target for crypto assets but has transformed into a fintech infrastructure service provider, indicating a profound shift in its business positioning. The firm's analyst team believes that Circle will play a key role in this "fundamental transformation of the global economic system" and reaffirmed its "Outperform" rating and $190 target price in its latest research report, suggesting significant upside potential for the company's stock.

Furthermore, Bernstein analysts Gautam Chhugani and others noted in the report that Circle's Q4 performance clearly diverged from the overall crypto market trend, emphasizing that the company is evolving towards becoming a core internet infrastructure provider, not just a stablecoin or crypto token business.

Ark Invest: Putting Money Where Its Mouth Is, Circle (CRCL) Stock Holdings Total Nearly $350 Million

Unlike research institutions, the investment firm Ark Invest, led by Silicon Valley's well-known investor "Cathie Wood," has consistently been a "major buyer" of Circle.

In early February, trading documents showed that Ark Invest purchased approximately $9.4 million worth of Circle stock through two of its ETFs;

On February 12, Ark Invest increased its holdings again by 75,559 shares of Circle (CRCL), valued at approximately $4.4 million.

Based on publicly available information, as of the time of writing, Ark Invest holds approximately 4,015,642 shares of Circle (CRCL) through its three funds ARKK (ARK Innovation ETF), ARKF (ARK Fintech Innovation ETF), and ARKW (ARK Next Generation Internet ETF), with a total market value of approximately $349 million (calculated at $87 per share).

The Vanguard Group: Holds Over 5.65 Million Circle (CRCL) Shares, Once Faced Floating Losses Exceeding $400 Million

On February 14, according to the latest 13F filing submitted to the U.S. SEC by the world's second-largest fund management company, The Vanguard Group, it shows that it currently holds a cumulative total of 5,653,110 shares of Circle stock CRCL (current value $339.4 million), with an entry cost of $739.6 million, resulting in floating losses exceeding $400 million.

As Circle (CRCL) stock price recovered to around $87 (stock price at the time of writing), this nearly $740 million investment now shows floating profits exceeding $152 million.

10x Research: Circle Soars Due to Short Squeeze

Yesterday, crypto research firm 10x Research pointed out in a post that the core driver of the recent rise in Circle's stock price was not the financial report data itself, but rather market positioning structure, which is more likely to trigger a high-probability short-covering rally rather than a simple fundamental revaluation. It is reported that a hedge fund established a large short position before the earnings release. However, as Circle's stock price surged in a single day, triggering a severe short squeeze, the hedge fund incurred approximately $500 million in losses in one day. 10x Research added that this round of intense volatility not only affected Circle (CRCL) but also spilled over to Coinbase (COIN) and Bitcoin. Although Circle is a clear bullish target, the overall magnitude of the move was primarily driven by an imbalance in the overall crypto market positioning structure. New market catalysts may soon emerge, potentially reshaping market narratives, after which market trading logic may return to fundamentals. In other words, 10x Research is not optimistic about Circle's (CRCL) future performance.

In summary, Circle is in a critical period of transitioning from its past narrative as "the first stablecoin stock" to a "fintech infrastructure" narrative. The business performance of its stablecoin USDC is promising, and its other new revenue streams (non-interest income) have also demonstrated their ability to generate profits to the market with Q4's high gross profit of $37 million.

Whether Circle (CRCL) can continue its current strong upward trend may be closely related to three key terms—"AI Payments," "Prediction Markets," and "Institutional Adoption."

USDC's "Growth Boosters": AI Payments, Prediction Market Trading, Large-Scale Institutional Adoption

From Circle's financial reports and CEO Jeremy Allaire's public statements, we can clearly see that Circle's current revenue channels are rapidly expanding, unlike in the past when it was highly dependent on the USDC stablecoin issuance business.

Previously, Circle announced that the Circle Payments Network (CPN) already has 55 financial institutions registered, with another 74 undergoing qualification review; the L1 blockchain network Arc public testnet has launched, attracting over 100 participants; USDC's unique adoption rate and integration advantages also endow Circle with "automated payment" capabilities for AI Agents. This may become its ticket to the next era of interconnected finance.

Circle's "AI Ticket": x402 Protocol, AI Agent Economy, and A2A Transactions

Circle's first ticket comes from AI payments. The x402 standard, led by Coinbase, became a market hotspot upon its launch in 2025. This protocol allows AI Agents to directly pay for services like API data access, computing resources, or content subscriptions using USDC via the HTTP 402 status code, essentially "bridging the last mile of payment" for AI Agents. USDC thus seamlessly integrates into the AI Agent economic system. Furthermore, transactions such as A2A (Agent to Agent) and M2M (Machine to Machine) proposed by many AI model companies will also circulate via USDC.

Previously, some analysts predicted that by 2030, the scale of the AI Agent economy ecosystem could exceed $30 trillion, with Agentic AI dominating 15% of daily financial decisions. In this regard, USDC possesses a significant first-mover advantage.

Circle's "Prediction Market Ticket": Prediction Market Trading Volume Continues to Hit New Highs, Weekly Transaction Count Exceeds 38 Million

Another major driver for the growth of USDC and Circle's business data may be attributed to the prediction market sector, where business data continues to climb.

According to Dune data, on February 23, the weekly transaction count (Feb 16-22) on prediction markets reached a new historical high of 38.01 million. Among them, Polymarket's transaction count was 22.58 million, ranking first; Kalshi's transaction count was 14.86 million, ranking second.

Meanwhile, Circle continues to make efforts in platform-level cooperation with prediction market giants—in early February, Circle announced a partnership with Polymarket to promote the optimization of stablecoin infrastructure for prediction markets. Circle will introduce transparent, fully-reserved stablecoin infrastructure to prediction markets, improving settlement reliability and reducing friction to support the next phase of development for on-chain financial markets.

Considering the background of a "big year for predictions" featuring events like the Winter Olympics and the World Cup, USDC transaction volume and custody revenue are expected to see further growth.

Circle's "Institutional Adoption Ticket": Legislation, Trust Bank, and Partnership Ecosystem

For institutional-level users, Circle and USDC may currently be the only "relatively optimal solution." The main reasons are:

First, the GENIUS Act framework will drive large-scale inflows of digital dollar reserves into the U.S. Treasury market, further boosting USDC issuance and circulation.

Second, Circle was approved to establish a national trust bank (First National Digital Currency Bank) in December 2025, accelerating its integration into the traditional financial system.

Third, Circle's partners span multiple fields including traditional payment institutions (e.g., Visa), financial software companies (e.g., Intuit), leading prediction market platforms (e.g., Polymarket), blockchain payment settlement networks (e.g., Morph Network), and cryptocurrency exchanges (e.g., Kraken, OKX, Bybit, Hyperliquid). It has gradually built its own "ecosystem moat."

Conclusion: Concerns for Circle's Stock Price Lie in Coinbase Profit-Sharing and U.S. Banking Sector Strangulation

In summary, Circle's (CRCL) stock price market performance may usher in a wave of strong rebound. However, constrained by factors such as the overall crypto market sentiment and the unresolved CLARITY Act, there is still some uncertainty regarding its future performance.

Specifically, first, there is Coinbase, which shares nearly $1 billion in stablecoin "promotion profits" annually. According to an assessment by BI analysts Paul Gulberg and Samuel Radowitz, if payment adoption accelerates, under the GENIUS Act framework signed by President Trump in July 2025, Coinbase's stablecoin revenue could grow two to sevenfold. For a cryptocurrency exchange whose stock price is also under pressure, this is undoubtedly an indispensable piece of the pie.

Second, as "the first compliant stablecoin stock," Circle is destined to face collective pressure from the U.S. banking sector. Although its trust bank application was approved, as Standard Chartered analysts stated in a report, stablecoins pose a real risk to global and U.S. bank deposits. U.S. bank deposits will decrease as stablecoin market capitalization grows, with the reduction roughly proportional to the weight of stablecoin market cap. U.S. regional banks are most affected, while investment banks are least affected. The report shows that only 14.5% of Circle's reserve assets are bank deposits, with an extremely low redeposit ratio. Similarly, traditional banks, driven by interests, are unlikely to sit idly by.

As for whether Circle's (CRCL) stock price can repeat the "10x miracle" mentioned at the beginning of the article, beyond the favorable timing of last year's "stablecoin boom," it may also require more "regional facilitative policies" provided by the U.S. government and regulatory authorities to lend a helping hand.