Circle (CRCL.US) falls from grace! Stock price plummets over 24% in two days, analysts say market is undergoing a rational correction.

After less than three weeks of being listed, the stock price of stablecoin issuer Circle (CRCL.US) saw a significant pullback this week, causing investor enthusiasm to quickly cool off. At the close on Wednesday, Circle's stock price fell by 10.79%, to $198.62, a cumulative decline of 24.6% over two consecutive days. Meanwhile, Coinbase (COIN.US) showed strong performance, with a consecutive two-day increase of 15.5%, closing at $355.37 on Wednesday, just 0.6% below its historical high in 2021. Peter Eberle, Chief Investment Officer of Castle Funds, stated that the decline in Circle's stock price was "not unexpected," as the previous rapid and high increase went beyond the reasonable range of fundamentals. Alexander Blume, CEO of Two Prime Crypto Hedge Fund, also pointed out that Circle's recent valuation is significantly inflated, and the market is undergoing a rational correction. He further stated that the strong performance of Coinbase's stock price may also reflect the market's reevaluation of Circle's "overvalued" status. Circle's surge in stock price on Monday was partly attributed to its partnership with the financial technology company Fiserv to jointly develop stablecoin products. In addition, the U.S. Senate's passage of a stablecoin regulation bill last week raised expectations for the compliance and regulation of stablecoins like USDC. Although the outlook is positive, investors have chosen to cash in on profits in the short term, leading to a rapid decline in the stock price. USDC issued by Circle is one of the mainstream stablecoins currently in circulation, and Coinbase, as its main distribution partner, receives significant revenue from USDC operations. According to public financial reports, in 2024, Circle paid Coinbase $908 million, accounting for more than half of its annual revenue of $1.7 billion. In just the first quarter of 2025, Coinbase received $299 million in revenue from Circle, also accounting for over half of Circle's quarterly revenue. Therefore, against the backdrop of clearer stablecoin regulations, both companies are likely to benefit, but Coinbase's profit model has more diversified potential. Analyst Mark Palmer from Benchmark noted that if the Trump administration's Digital Asset Market Structure Clarification Act is passed, Coinbase stands to benefit even more. This act aims to streamline the regulatory authority of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over crypto assets, establishing a unified framework for the market structure. Coinbase's stock price rose to $369.28 at one point on Wednesday, reaching a new historical high, before closing at $355.37, still showing strong performance. Analyst Devin Ryan from Citizens has set a target price of $400 for Coinbase, representing a 12.6% potential upside from the current level. He stated, "We see Coinbase forming multiple potential new revenue streams in the tens of billions of dollars, and even though the stock price has risen strongly in June, we still believe there is adequate valuation space."