USDC processed over $8.4 billion in on-chain transactions in January, contributing to an estimated $10 billion increase in the stablecoin market. Despite that volume, shares of Circle Internet Group (CRCL) fell nearly 8% during the month.
January’s activity confirmed USDC’s central role within the liquidity of the crypto ecosystem. The token accounted for the majority of transaction value during January and held approximately 29% of the stablecoin market share. Simultaneously, its circulating supply grew year-over-year to around $73.7 billion.
This growth reinforces USDC’s position as a key infrastructure for on-chain activity. Its sustained adoption solidifies its essential role in daily operations across multiple networks and applications, especially in environments requiring deep liquidity and nominal stability.
However, USDC’s utility is not evenly distributed. A significant proportion of its flows are concentrated in trading and lending applications, areas that typically involve higher levels of risk within the crypto market.
Morgan Stanley noted that more than three-quarters of USDC usage is concentrated in functions associated with higher-risk segments. This concentration limits how investors assess Circle’s economic value, even as network activity and token usage continue to grow.
Why corporate valuation diverged from USDC usage
From a market perspective, several structural vulnerabilities in Circle’s business model outweighed its strong product indicators. The company relies heavily on interest income generated by the reserves backing USDC, a factor that introduces direct sensitivity to interest rate cycles.
As of February 2, Circle’s stock (CRCL) was trading around $62.39, down nearly 7.9% in recent days and more than 70% from its 52-week high. The gross margin for the third quarter of 2025 was projected to be around 4.12%.
At the same time, distribution costs increased 64% year-over-year to $407 million in the third quarter of 2025, while the operating margin remained negative, hovering around 9.82% over the twelve months ending January 2026.
Analysts identified two immediate pressures: the expectation of interest rate cuts during 2026, which would reduce reserve yields, and the increase in operating costs associated with scale and infrastructure investments.
The potential introduction of new regulations on stablecoins, including the reconsideration of the CLARITY Act in mid-2026, could redefine operating and reserve requirements. For institutional participants, the message is clear: high on-chain volumes do not guarantee sustainable cash flows, and Circle’s capital will remain sensitive to changes in rates, costs, and regulatory signals, even if USDC maintains its dominance in transaction volume.
