Circle stock price rebounds after sharp decline, regulatory concerns and valuation debates intensify

Circle (CRCL) Stock Price Plummets and Rebounds Amid Regulatory Concerns and Valuation Debate

Circle Internet Group (Circle, CRCL) stock dropped 20% earlier this week, wiping out approximately $5 billion in market value. The decline was driven by a combination of factors, including the proposed “CLARITY Act” draft containing a ban on passive yields for stablecoins, wallet freezes, and news about Tether’s audit. Currently, CRCL opened at around $104 and showed a mild recovery, but with the recent closing at $98.27, volatility persists within the ongoing trading range.

CRCL Stock Price Rebounds Slightly After a 20% Drop in One Week

On March 24, Circle’s stock fell from $126.64 to an intraday low of $101.17, with a trading volume of 56.4 million shares—about four times the 90-day average. It then rebounded approximately 3%, reclaiming the $104 level, but closed at $98.27 in the latest trading session. The stock remains highly volatile, fluctuating between $49.90 (52-week low) and $298.99 (52-week high). The day’s trading range was $97.34 to $103.55.

Market experts suggest that the sharp decline may be due to overselling driven by fears of excessive regulation. Some analysts believe that if the market can calm fears over the “CLARITY Act,” there could be a 25% rebound. The options market shows indecision, indicating mixed investor sentiment, with CRCL down 4.56% from the previous day.

“CLARITY Act” Stablecoin Passive Yield Ban Sparks Controversy

The immediate cause of the stock drop was the inclusion of a ban on passive yields for stablecoins in the “CLARITY Act” draft. The bill prohibits paying interest solely for holding stablecoins, targeting incentives like Coinbase’s USDC 3.5% yield program. However, active incentive programs remain permitted.

Circle’s main revenue comes from interest earned on USDC reserves invested in U.S. Treasury bonds. In Q4 2025, Circle reported $711 million in Treasury bond interest, a 60% increase year-over-year. The 97% growth in USDC supply has driven higher yields, but if the “CLARITY Act” passes, this profit model could be impacted.

However, the bill does not ban stablecoin issuers from earning investment income on their reserves. The issue is limited to passive distribution of these earnings to consumers. Some analysts believe Circle’s core business model is likely protected by law.

Wallet Freezes and Tether Audit Raise Centralization Concerns

Beyond regulatory uncertainty, Circle’s wallet freezes have worsened investor sentiment. On March 23 and 24, Circle froze 16 hot wallets related to U.S. civil litigation. This caused temporary disruptions at exchanges like FxPro and Pepperstone, reigniting fears over stablecoin centralization risks.

Meanwhile, news emerged that Tether is working with one of the Big Four accounting firms to conduct a formal audit, which could challenge Circle’s dominant position in regulated markets. Although Tether has long faced transparency concerns, a successful audit could boost credibility and intensify competition with Circle.

Bitwise CIO: “Valuation Could Reach $75 Billion by 2030”

Despite short-term volatility, the long-term outlook remains optimistic. Bitwise CIO Matt Hougan projects that by 2030, Circle’s valuation could reach $75 billion—double its current level—based on a scenario where stablecoins grow to $1.9 trillion and Circle captures 25% of that market.

Hougan emphasizes that even if increased competition and tighter regulation cut Circle’s profit margins in half to 0.8%, expansion in payment and collateral use cases for stablecoins will continue to drive growth. This suggests a shift toward a growth model focused on utility rather than passive yield.

JPMorgan Names CRCL a “Top Pick,” with 140% Upside Potential

JPMorgan has designated CRCL as a “top pick,” citing a potential 140% upside. Key upcoming milestones include: the Senate’s “markup” of the “CLARITY Act” in early April 2026, Tether’s audit in Q2 2026, and Circle’s Q2 earnings report. Of particular interest is whether the Q2 results will confirm the company’s transition toward a revenue model based on active services.

Market Balances USDC Growth and Regulatory Risks

The future trajectory of Circle’s stock depends on balancing the expansion of USDC’s market dominance with regulatory developments. USDC’s supply surged 97% in Q4 2025, solidifying its position in the stablecoin market, but the “CLARITY Act” and Tether’s competitive moves introduce uncertainties.

Experts believe that if the bill only restricts passive yield sharing while protecting issuers’ reserve investments, Circle’s business model remains sustainable. However, shrinking revenue-sharing programs with distributors could impose short-term revenue pressures.

Meanwhile, Circle is diversifying revenue streams by expanding payment infrastructure and institutional client base. As stablecoins evolve from speculative assets to global payment tools, the market generally remains optimistic about Circle’s long-term growth scenario.

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