When Sister Wood "Sells Flying", Retail FOMO: Why Did Circle Break $200 Overnight?

Author: White55, Mars Finance

1. Historic breakthrough: the "Bretton Woods moment" from crypto assets to digital dollars

In the early hours of June 19, 2025, the U.S. capital markets once again witnessed a carnival that could go down in financial history: the share price of stablecoin giant Circle (CRCL) soared 34% in a single day, hitting the $200 mark intraday, the biggest increase since its listing on June 5. Behind this figure is not only the frenzied pursuit of new asset classes by capital, but also a game of reconstruction of monetary sovereignty, financial power and regulatory order.

Just 48 hours ago, the U.S. Senate overwhelmingly voted 68-30 to pass the GENIUS Act (the full name of the "Guiding and Building the U.S. Stablecoin National Innovation Act"), which establishes a federal regulatory framework for U.S. dollar stablecoins. The bill defines stablecoins as "digital cash", requires issuers to reserve 100% of highly liquid assets (such as short-term U.S. bonds, cash deposits), and prohibits interest payments to users to strengthen their payment instrument attributes. This legislative breakthrough marks the first time that crypto assets, which have been in the gray area since the birth of Bitcoin, have been officially incorporated by the traditional financial system. As Circle CEO Jeremy Allaire declared on social media, "It's the 'iPhone moment' of the digital dollar – as stablecoins evolve from the lubricant of crypto transactions to the infrastructure of global payments, the shape of money will be completely rewritten."

The market's reaction confirms this judgment. Since its $31 IPO on June 5, Circle shares have risen 543% to more than $40 billion in market capitalization, surpassing PayPal and approaching Square's peak valuation. The core logic of this round of surge lies in the bill's "triple empowerment" of USDC (the US dollar stablecoin issued by Circle):

• Compliance premium: The bill brings stablecoin issuers with a market capitalization of more than $10 billion into the Federal Reserve's supervision, forcing competitors such as Tether to face stricter audit and reserve requirements, while USDC has become the preferred haven for institutional funds with its first-mover compliance advantage (99.5% of reserves are U.S. bonds and cash);
• Scenario expansion: The bill explicitly allows stablecoins to be used in scenarios such as daily payments and cross-border settlements, breaking the status quo that more than 80% of its trading volume is concentrated in crypto asset exchanges, paving the way for USDC to penetrate traditional payment networks such as Visa and SWIFT.
• Geopolitical dividends: The bill prohibits non-dollar stablecoins from entering the U.S. market and forces foreign issuers (such as Tether) to submit to equivalent regulation, essentially bringing the global stablecoin market into the U.S. dollar hegemony system. Against this backdrop, USDC's $61 billion in circulating volume (29% of the global stablecoin market) has become a strategic tool for the United States to consolidate its hegemony over the "digital dollar".

2. The fission of business models: The rise of Circle from "U.S. bond arbitrageur" to "on-chain Fed"

is essentially a revolution in the function of traditional financial intermediaries. Its core business model can be summarized as a "three-step":

the first step: minting stablecoins and absorbing global dollar liquidity

When a user buys 1 USDC through a platform like Coinbase, Circle receives $1 in cash. As of the first quarter of 2025, Circle has $61.4 billion in reserve assets under management, 80% of which is invested in short-term U.S. Treasuries and 20% is deposited with systemically important institutions such as Bank of New York Mellon. This model generates windfall profits under the Fed's high interest rate cycle (current 10-year Treasury yield of 4.3%): Circle has a total revenue of $1.676 billion in 2024, 99% of which comes from reserve interest, with a net profit of $156 million.

Step 2: Build a payment network to replace SWIFT's century-old hegemony

Circle's "CPN" (Circle Payments Network) initiative, which is secretly advancing, attempts to use blockchain technology to achieve second-level settlement of cross-border payments, with the rate compressed from 1% to 0.01% in traditional SWIFT. This ambition is endorsed by a bill that would require stablecoin issuers to interface with FedNow, the Federal Reserve's real-time payment system, laying the groundwork for a digital dollar to interconnect with USDC. If CPN is successful, Circle will become an "on-chain hub" connecting central bank digital currencies (CBDCs) with private stablecoins, comparable to AWS in the Internet era.

Step 3: Devour real-world assets and start the RWA (real-world asset tokenization) revolution

USYC, a tokenized Treasury bond fund launched in partnership with BlackRock, marks Circle's expansion into the $16 trillion U.S. Treasury market. By converting assets such as bonds and real estate into on-chain tokens, USDC will become a natural settlement medium for these assets, charging minting and circulation fees. If this transformation is successful, Circle's income structure will shift from a single interest dependence to a three-legged balance of "reserve interest + payment fee + RWA service fee", completely getting rid of the label of "US Treasury yield puppet".

However, there is a fatal risk in this grand narrative. Circle's net profit margin of just 9.3% is well below the average for tech giants, and at its core is the high cost of distribution: $908 million (60% of total costs) paid to Coinbase in 2024 exposes the weakness of ecological control. To make matters worse, once the Fed cuts interest rates to 3% in 2026 as the market expects, Circle's interest income will shrink by 30%, forcing management to prove the profitability potential of the payment and RWA business over the next 18 months.

3. Capital Secret War: The "Ice and Fire" of Institutional Retreat and Retail Investors' Carnival

When the market cheers for the soaring price of Circle, a hidden capital game is being staged. On June 17, Cathie Wood, the founder of Ark Invest, sold 643,000 shares of Circle stock for two consecutive days and cashed out $96.5 million, triggering a panic in the market about "the good is out". This operation is in stark contrast to its usual belief in disruptive technology – is it profit-taking, or is it smelling the uncertainty of the regulatory landing?

Compared to other capital moves, the answer may lie in the details:

• BlackRock is on hold: BlackRock, a cornerstone investor in Circle, holds a 10% stake and has not disclosed a reduction in its holdings, clearly betting on the long-term value of RWA tokenization;
• Insider restriction game: CEO Jeremy Aller only plans to sell 8% of his stake (about 1.58 million shares), which is far below the IPO lifting limit, conveying management confidence;
• Retail influx: Data from platforms such as Robinhood shows that retail trading has soared to 34% from 15% at the beginning of the IPO, and leveraged contract open interest has surged by 300%, suggesting that market sentiment has entered irrational territory.

Behind this divergence is the fundamental divergence between institutions and retail investors on Circle's valuation model:

• Institutional perspective: Based on the DCF (discounted cash flow) model, Circle's current 174x P/E ratio has overdrawn its growth expectations for the next three years, especially the billions of dollars needed to build a payment network, which may squeeze short-term profits;
• Retail Narrative: Likening Circle to an "on-chain Fed" and assuming that its market capitalization should be based on the size of the central bank's balance sheet (the Fed currently has $8.9 trillion in assets), giving it a higher premium.

This cognitive gap is a classic portrayal of the symbiosis of capital market bubbles and opportunities.

4. The ultimate challenge: The fate of the "spear and shield" circle of dollar hegemony

has long gone beyond the scope of business and has become a microcosm of the financial game between major powers. The passage of the GENIUS Act is essentially a "digital expedition for the dollar": by mandating stablecoin reserves to U.S. bonds, the U.S. is turning global crypto liquidity into a "new buyer" of U.S. bonds. According to the data, Tether and Circle already hold $122 billion in short-term U.S. bonds, accounting for 2% of the market's stock, and if the size of the stablecoin reaches $3 trillion in 2030 (Standard Chartered Bank forecast), its purchasing power on U.S. bonds will exceed that of Japan and China combined.

However, this sophisticated design faces a triple backlash:

• Technological encroachment: The cross-border nature of blockchain is in fundamental conflict with the long-arm jurisdiction of US dollar regulation, and decentralized stablecoins (such as DAI) may bypass the law and form a "regulatory enclave";
• Geopolitical rebound: China is accelerating cross-border settlement of the digital yuan, and Hong Kong's Stablecoin Ordinance explicitly supports the Hong Kong dollar stablecoin, trying to replace USDC in the Belt and Road trade;
• Internal divisions: The bill prohibits big tech companies (such as Amazon and Meta) from issuing stablecoins, but traditional giants such as Walmart and JPMorgan Chase have secretly laid out their plans and may compete head-on with Circle in the future.

Conclusion: Reconstructing the Future of Money on a Knife Edge

At 2:30 a.m., Circle's stock price froze at $199.59 on the electronic screen of the New York Stock Exchange. This figure is not only the price of capital for a technological revolution, but also the yardstick for the compromise of the old order with the new world. While Fed Chair Jerome Powell avoided the "digital dollar" timeline during a congressional hearing, Circle had quietly laid the track to connect the traditional and crypto worlds.

The end of this feast may be as frothy and shattered as the railroad frenzy of the 19th century, or it may be like the Internet revolution that reshaped the human economy. The only certainty is that when the dollar hegemony is reborn through the blockchain, Circle is both a chess player and a pawn – and every time it rises and falls, it writes a modern apocalypse about the power of money.