Circle: Progress despite headwinds

Interest rates and crypto trading still drive results

Introduction

In my post on Circle’s Q3 results I drew the following conclusion:

Circle is a leader in a hyper-growth market, they are gaining share from their key rival, and they are profitable; but, their core market is subject to volatility and Circle revenue is also exposed to declining interest rates – which seem likely in the next few quarters. They can’t control either volume or rates. … Circle is building a foundation to launch other use cases, but those use cases will take a long time to gain traction.

None of that was unique insight. The great unknown is whether Stablecoins can break out of their Crypto use case to have more general utility in commerce.

Circle has now posted Q4 earnings and most of what I wrote is still true. They make profits, have high share, and are diversifying into less volatile use cases. I am still a fan. But the key drivers are still interest rates and Crypto trading volume which they have no control over. This post will review each of the supports for my conclusion.