The crypto industry, which has been slumping for months, got a jolt of good news when Circle announced earnings on Wednesday morning. The stablecoin issuer revealed its revenue increased by 77% in the fourth quarter compared to a year earlier, sending its shares up 23% in morning trading.
Circle’s growth is a sign that demand for stablecoins remains strong despite the broader crypto market’s downturn, as the company reported that the amount of USDC in circulation ticked up about 72% compared to last year. The current market cap for USDC is around $75 billion. Stablecoins, a type of cryptocurrency pegged to a fiat currency, have become increasingly popular in the past year, as a wide array of companies use them to transfer money.
“Overall, the underlying use cases of USDC are accelerating despite crypto price headwinds,” said Robert Bamberger, a senior equity research associate at Baird.
Circle, the second-largest global issuer of stablecoins, said in the statement that major companies like Visa and Polymarket are adopting its infrastructure. The company also said that it is partnering with Bermuda’s government to make the country the world’s first fully onchain national economy.
As a stablecoin issuer, Circle makes most of its income by investing its users’ funds in short-term U.S. treasuries. This means that its revenue is vulnerable to any move by the Federal Reserve to lower interest rates. The company has invested in creating its own blockchain, called Arc, to diversify its revenue stream.
