To The Moon

Tiger Research Team is maintaining a HOLD rating on $Circle Internet Corp.(CRCL)$ ahead of its 4Q25 earnings, but we are lowering our Price Target to $85 (previously $100).

The key drivers? A combination of soft crypto asset prices and interest rate headwinds is putting pressure on the company's reserve income engine.

Here is the team's comprehensive analysis of the data, the macro outlook, and our valuation model. 👇

1. 4Q25 Data Check: Circulation & Market Share 📊

The Good:

According to CoinMarketCap, average USDC circulation reached $76.3B in 4Q25, up 12% q/q (from $67.8B in 3Q).

• YTD Update: So far, in 1Q26 (Jan 1 – Jan 19), USDC circulation has risen slightly by $0.67B.

The Bad:

Momentum slowed significantly at the end of the year. Circulation peaked at approx. $78.6B in December but declined to $75.4B by quarter-end (4% below the peak).

The Competition:

While the total fiat-backed stablecoin industry grew 6% q/q to $269.9B, Circle lost ground to its main competitor.

• USDC Market Share: Declined from 28.9% ➝ 28.1%.

• USDT Market Share: Rose from 68.3% ➝ 69.2%.

2. The Financials: Yields Under Pressure 💸

On the yield side, the macro environment is shifting. Average SOFR (Secured Overnight Financing Rate) declined to 3.99% in 4Q, down 33 bps q/q.

Based on this, below are modeling of $Circle Internet Corp.(CRCL)$ ’s 4Q performance:

• Reserve Return Rate: We model this at 3.90%, implying reserve income of $744M (+5% q/q).

• Non-Reserve Revenue: We do not expect meaningful growth here and model a 10% q/q decline.

• Full Year Revenue: This results in FY revenue of $98.6M, which falls within management’s guidance range of $90M–$100M.

3. 2026 Outlook: Rate Cuts & Crypto Prices 🔮

Looking ahead, the team is adjusting its model for a tougher environment.

The Macro View: The base case now adopts the market expectation of two Fed rate cuts in 2026. Furthermore, although BTC could theoretically act like "digital gold" during geopolitical uncertainty, the report notes it is still predominantly treated as a risk asset. Continued pressure in 1H 2026 could constrain stablecoin demand.

The Revisions:

Due to expected near-term softness in crypto prices and lower rates:

• 2026E Circulation: Forecast reduced by 8%.

• Reserve Return Rate: Revised down by 7 bps.

• Reserve Income: Estimate reduced by 10%.

Overall, Tiger Research has decreased the 2026 Total Revenue estimate by 9% and Non-GAAP EBITDA by 8%.

4. Valuation & Risks ⚖️

Valuation Methodology (SOTP): The new target of $85 is based on a Sum-of-the-Parts approach:

1. Reserve Income Segment: Valued at $15.2B (based on 26x 2026E EBITDA of $583M).

2. Emerging Businesses: (Payments, Infra, Tokenized products) Valued at $6.3B.

3. Total Enterprise Value: $21.5B, or $85 per share.

5. Key Risks to Watch:

• Valuation: Circle enjoys a premium due to its unique position; current prices price in a lot of future optionality.

• Macro Dependence: Earnings are highly sensitive to rate cuts and bear markets.

• Competition: Big Tech, banks, and non-crypto issuers could challenge Circle’s payment rails.

• Execution: Success in new products (CPN, developer tools) is essential to support the current valuation.

📝 Summary

• Tiger Research remains constructive on Circle's long-term strategic optionality and resilient core earnings profile.

• However, the immediate outlook is clouded by the evolving rate cycle and the potential for policy-driven lower rates, which pose an identifiable downside risk to the reserve income engine.

• For investors, the key monitoring points in 2026 will be the Fed's pace of cuts and whether Circle can arrest its market share slide against Tether.

🐯 Questions for Tigers

1. Market Share War: Do you think Circle can regain its lost market share from USDT in 2026, or is Tether's dominance now unshakable?

2. Rate Cut Impact: How much do you think the potential Fed rate cuts will hurt your stablecoin yield strategies?

3. Buy or Hold? With the price target cut to $85, do you see this as a buying opportunity or a signal to stay on the sidelines?

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