We’ve long been eager to invest in Circle Internet Group (CRCL), the issuer of USDC, due to its vital role in the crypto ecosystem and straightforward revenue model. After years as a private company, CRCL recently went public, and its stock has rocketed—from an IPO range of $27–28 to over $240—yielding a ~780 % return for early investors in just weeks.
🏦 Why CRCL Matters
Stablecoins at the core: CRCL issues USDC (USD-backed) and EURC (euro-backed), enabling fast, low-cost transfers, lending, and payments across crypto platforms and institutions.
Infrastructure built for compliance: With a transparent, regulatory‐friendly setup, CRCL is poised to benefit from institutional adoption and improved global financial inclusion.
Favorable regulation incoming: A pro-stablecoin bill passed the U.S. Senate last week, potentially streamlining fragmented rules—a huge win for CRCL’s legitimacy and future growth.
📈 Revenue & Scalability
Interest income engine: CRCL earns revenue by investing reserves (from issued stablecoins) in treasuries and cash securities.
Low incremental costs: Issuing more stablecoins doesn’t significantly raise costs, giving the business strong operating leverage.
Cyclical dependence on interest rates: As the Fed signals rate cuts, CRCL’s margins and profits may experience pressure despite growing stablecoin usage.
💰 Valuation Concerns
Stratospheric multiples: With a market cap of ~$52 billion against ~$1.8 billion in annual revenue, CRCL trades at ~29× sales and ~305× earnings—levels we find tough to justify given the interest-rate dependency.
Short- to medium-term softness: With expected rate cuts, we believe near-term margins could contract, likely keeping multiples high or valuations pressured.
🔧 Our Preferred Strategy: Selling Puts
Rather than buying CRCL outright at these levels, we’re selling put options—specifically the October 17th $80 strike puts, currently priced around $3.80:
Attractive yield: Generates about 4.5 % over 117 days, annualized to ~14.3 %.
Flexibility: If CRCL stays above $80 by October, we pocket the premium; if it falls below, we buy at an effective cost basis near $76.20—a steep discount (66 %) to today’s stock price ($240).
Risk‑reward balance: We get income now, plus optionality to own CRCL at a safer valuation if assigned—potentially capturing long-term upside without front-loading risk.
⚠ Risks to Watch
Assignment downside: If CRCL collapses to zero, we’ll still owe $80/share—mirroring stock-ownership risk.
Interest-rate sensitivity: Profits remain tied to rate levels; moves down could crimp margins even if adoption grows.
Systemic risks: Any regulatory, technical, or confidence failure around stablecoins or USDC could materially impact CRCL.
🧭 Our Conclusion
We see CRCL as a high-potential yet pricey bet today. However, selling deep out-of-the-money puts allows us to capture compelling yield while preserving upside optionality to own shares at a discount. It blends income generation with strategic positioning in a high-conviction long-term theme.
Rating: Hold — we prefer income and optionality over full exposure at the current valuation.
🏦 Why CRCL Matters
Stablecoins at the core: CRCL issues USDC (USD-backed) and EURC (euro-backed), enabling fast, low-cost transfers, lending, and payments across crypto platforms and institutions.
Infrastructure built for compliance: With a transparent, regulatory‐friendly setup, CRCL is poised to benefit from institutional adoption and improved global financial inclusion.
Favorable regulation incoming: A pro-stablecoin bill passed the U.S. Senate last week, potentially streamlining fragmented rules—a huge win for CRCL’s legitimacy and future growth.
📈 Revenue & Scalability
Interest income engine: CRCL earns revenue by investing reserves (from issued stablecoins) in treasuries and cash securities.
Low incremental costs: Issuing more stablecoins doesn’t significantly raise costs, giving the business strong operating leverage.
Cyclical dependence on interest rates: As the Fed signals rate cuts, CRCL’s margins and profits may experience pressure despite growing stablecoin usage.
💰 Valuation Concerns
Stratospheric multiples: With a market cap of ~$52 billion against ~$1.8 billion in annual revenue, CRCL trades at ~29× sales and ~305× earnings—levels we find tough to justify given the interest-rate dependency.
Short- to medium-term softness: With expected rate cuts, we believe near-term margins could contract, likely keeping multiples high or valuations pressured.
🔧 Our Preferred Strategy: Selling Puts
Rather than buying CRCL outright at these levels, we’re selling put options—specifically the October 17th $80 strike puts, currently priced around $3.80:
Attractive yield: Generates about 4.5 % over 117 days, annualized to ~14.3 %.
Flexibility: If CRCL stays above $80 by October, we pocket the premium; if it falls below, we buy at an effective cost basis near $76.20—a steep discount (66 %) to today’s stock price ($240).
Risk‑reward balance: We get income now, plus optionality to own CRCL at a safer valuation if assigned—potentially capturing long-term upside without front-loading risk.
⚠ Risks to Watch
Assignment downside: If CRCL collapses to zero, we’ll still owe $80/share—mirroring stock-ownership risk.
Interest-rate sensitivity: Profits remain tied to rate levels; moves down could crimp margins even if adoption grows.
Systemic risks: Any regulatory, technical, or confidence failure around stablecoins or USDC could materially impact CRCL.
🧭 Our Conclusion
We see CRCL as a high-potential yet pricey bet today. However, selling deep out-of-the-money puts allows us to capture compelling yield while preserving upside optionality to own shares at a discount. It blends income generation with strategic positioning in a high-conviction long-term theme.
Rating: Hold — we prefer income and optionality over full exposure at the current valuation.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.