45-day Stock Halving: Is Circle Actually a "DeFi Barometer"?

Original author: Eric, Foresight News

In June 2026, Circle’s seemingly perfect turnaround story came to an abrupt halt. As of June 25th local time in the US, USDC's circulating supply had dropped to 73.6 billion, a decline of about $7 billion from its peak, while Circle's stock price also halved to around $63.

On the surface, $7 billion is less than 10% of $80 billion. However, for comparison, USDT's circulating supply once peaked at around $191 billion and now stands at approximately $186.3 billion, a decrease of only $4.7 billion or less than 3%.

While there is no direct evidence linking the decline in USDC circulation to the drop in Circle's stock price, their synchronicity and the coincidence of previous DeFi security incidents with the timing of Circle's stock decline inadvertently validated a point made by Compass Point analyst Ed Engel back in January:

Circle is a bellwether for DeFi activity.

At that time, Engel argued that Circle's trading pattern resembles that of cyclical stocks, noting that from October 2025 to January 2026, the correlation coefficient between USDC's circulation curve and ETH's price trend reached 0.66. The core reason is that 75% of USDC circulates within cryptocurrency exchanges, DeFi protocols, and similar scenarios, with far less used for daily consumption, cross-border payments, and other real-world applications than commonly assumed.

Looking at the top USDC holding addresses on Etherscan, the front page is dominated by contract holding addresses, with USDC residing in DeFi protocols, exchange multi-sig wallets, cross-chain bridges, and similar addresses. Furthermore, the top 100 USDC holding addresses on Ethereum account for over 50% of all USDC, with just 0.32% of holding addresses controlling 93.55% of the total supply. A substantial amount of USDC sits within protocols, yielding returns higher than bank deposits.

Such data concentration is hardly characteristic of a "digital dollar" meant for daily circulation. One might counter with USDT's even higher concentration on Ethereum, but USDT is commonly used in the Web3 industry for salary payments, foreign trade for settlements, grey and black market activities to evade regulation, and in third-world countries to protect deposits. These real-world use cases are very common.

Although less "glamorous" than USDC, these scenarios form the bedrock of USDT's demand. Consequently, as the stablecoin most used as a trading pair, USDT has contracted less during this bear market compared to the more compliant USDC. A report today that USDT is trading at an 8% premium in India further supports this view.

The overall TVL of DeFi began to decline in mid-April, coinciding with the Kelp DAO hack event, while Circle's stock started falling in mid-May. Although the downturns began at different times, the subsequent trajectories have been largely similar.

Just last month, Circle and Coinbase jointly pushed USDC to become the settlement stablecoin for Hyperliquid. This came at the cost of each staking 500,000 HYPE tokens and relinquishing 90% of the yield generated by the reserve assets backing USDC on Hyperliquid. Behind this seemingly "win-win-win" scenario lies Circle's predicament: its primary battleground, DeFi, is rapidly shrinking. The Kelp DAO incident severely damaged DeFi's credibility, and further natural growth of USDC supply through DeFi has hit a bottleneck, forcing Circle to take matters into its own hands.

If you look closely, you'll find that USDC isn't just the settlement asset for Hyperliquid, but also for platforms like Lighter. Beyond the crypto space, Circle is tirelessly promoting the use of USDC as a "dollar equivalent." According to Artemis data, USDC's "organic transfer volume" (excluding wash trading, high-frequency trading, exchange address consolidation, etc.) stood at $18.3 trillion in 2025, compared to USDT's $13.2 trillion.

It's undeniable that USDC is widely used in institutional and compliant payment scenarios. However, the amount of USDC required for these uses is less than anticipated. Fund flows in these cases may not always utilize USDC directly; instead, USDC serves as an "intermediate state" to reduce the time and cost of transfers between banks or financial institutions.

In other words, adding another $10 billion in USDC circulation might require trillions of dollars in real-world fund flows in the fiat system. But on-chain, it could just be driven by a few large DeFi protocols, meme coin trading platforms, or prediction markets. No matter how fast USDC circulates or how high its usage rate is in the real world, if the total circulating supply doesn't increase, Circle's revenue and profits won't grow either.

Of course, this isn't necessarily a "death sentence" for Circle. If, in the future, Circle can shed its dependence on DeFi, or demonstrate that real-world usage has a significant impact on boosting USDC supply, then Circle's investment thesis could be rewritten. But in the short term, the focus may remain on whether DeFi can overcome the shackles of "imbalanced risk and reward" and restore market confidence.