Circle Internet Group has seen its stock lose approximately a quarter of its value over the course of a single week, weighed down by three unresolved pressures that analysts say challenge the fundamental assumptions behind the company’s investment case. Shares opened near $126 on March 24, then fell 20% to close at $101, before sliding further over subsequent sessions to end the week at $93. Three of the past four trading sessions closed in negative territory, according to historical data from Google Finance.
The steepest single-day decline followed two pieces of negative news that emerged on the same day. A Senate draft bill surfaced that could prohibit the returns Circle distributes to stablecoin holders, and rival firm Tether announced it had engaged a major accounting firm to conduct its first-ever reserves audit. Both developments landed simultaneously and appear to have continued dragging on the stock in the days that followed.
The drop is particularly notable given Circle’s strong performance in the weeks prior. The company had surged roughly 60% following its fourth-quarter earnings report, and analysts had been broadly optimistic. Clear Street raised its price target for Circle to $152 earlier this month. The Senate’s proposed yield ban and the Tether audit announcement remain unresolved, and the draft bill text is expected to be released publicly this week, ahead of a Senate Banking Committee markup targeted for the second half of April — a deadline legislators say the bill must clear to avoid stalling until after the midterm elections.
Analysts who spoke with Decrypt said the stock’s decline reflects broader uncertainty about Circle’s business model and whether the pressures driving the selloff are temporary or more structural in nature. Siwon Huh, a researcher at Four Pillars, noted that passive yield is likely one of the primary reasons retail users on Coinbase hold USDC. Replacing that mechanism with activity-based incentives would require building an entirely new user engagement structure, he said. Such a transition could take at least a year and cost Circle a portion of its retail user base in the process.
Huh also pointed out that activity-based rewards programs differ structurally from passive yield, requiring ongoing product investment, with returns diminishing if user engagement levels off. At the same time, he noted that USDC’s circulation has reached record levels despite the broader market downturn, suggesting holders value it as a payments tool — which could mean the stock’s decline overstates the actual risk to the business.
Dominick John, an analyst at Zeus Research, said that if the yield ban is enacted, Circle’s USDC could lose what he described as its core carry trade, forcing a shift toward usage-driven economics. Activity-based rewards can generate transaction flow, he said, but without a yield engine, the result could be lower margins and weaker balance sheet stickiness. He estimated the transition could take two to four quarters to reset and up to 18 months to fully stabilize.
The Tether audit presents a separate competitive threat. John estimated that a successful sign-off from Deloitte could put between 5% and 15% of USDC’s institutional market share at risk in the near term, primarily from yield-agnostic flows that can shift based on liquidity conditions and market perception. Any larger shift, he noted, would require consistent proof of long-term reserves over time. Ryan Yoon, a senior analyst at Tiger Research, added that consensus around the CLARITY Act‘s passive yield ban makes it virtually impossible for stablecoin issuers to adopt a traditional bank-like deposit and profit-sharing model, which has become a key factor capping Circle’s structural upside.
Despite the headwinds, some analysts caution against reading the current slump as a definitive sign of deteriorating corporate value. Yoon noted that Circle is already firmly entrenched in institutional finance and the broader business-to-business ecosystem, and that the company has sufficient financial runway to absorb regulatory uncertainty. The coming weeks, particularly the public release of the Senate draft text and the committee markup process, are expected to provide greater clarity on the regulatory path ahead.
Originally reported by Decrypt.
