Circle Stock 750% Surge Sparks Debate on Stablecoin

Circle Internet Group Inc., the company behind the USDC stablecoin, had the whole world surprised when its stock jumped 168% on its first day of trading. The stock on the day started at the IPO price of $31 on June 5 and kept on climbing. 

On Monday, the price went up another 9.6% and closed at 263.45, but dropped by 17% today. Still, that’s nearly 750% growth in just a few weeks.  A lot of investors are impressed by this because Circle is one of the few companies in the world of digital money that is now publicly traded.

Circle Stock Chart since it started trading | Source: Yahoo Finance

Meanwhile, this happened around the same time the U.S. Senate board passed the GENUIS Act bill to set rules for sablecoin. The stablecoin was a big win for the crypto space and for President Donald Trump, who also supports it. 

The president is also linked to a stablecoin through a company called World Liberty Financial. That coin already has a value of about $2 billion. The House of Representatives is also working on its own version of this new law.

Because of all of this, other big companies are beginning to join the trend. According to a previous report , Fiserv, a tech company, announced it will launch its own digital coin (FIUSD), and it’s working with Circle and Paxos to make it happen. Mastercard has teamed up with Fiserv to bring stablecoins into its payment system. Even big names like Walmart and Amazon are thinking about creating their own coins. 

This is all great news, but it has also caused problems for old-school payment companies like Visa, which are not moving as fast. With that, not everyone is impressed. 

In a statement, Trevor Williams, a financial expert at Jefferies, said, “We are highly skeptical stablecoins will ever be a relevant payment method in the US.” He believes that people will stick with credit cards, which are easy to use and offer rewards. Another expert, Michael Lebowitz, said stablecoins are more like digital savings accounts for people who use crypto, not real competitors to Visa or Mastercard.

Aside from that, there are also some risks that are being pointed out. Experts say Circle’s stock has a low free float, only 25%, which means fewer shares are available for trading. That can make the stock jump more quickly, but also fall just as fast. Its price-to-earnings ratio is around 180, far above the S&P 500 average of 22, raising concerns about whether it’s overvalued.

Even so, Circle is moving forward. It’s building a new system to help banks send money across borders using USDC. Shopify will also start using USDC for payments around the world.