USDC Supply and Circle Valuation: Analyzing the Underlying Logic of a $58 Billion Market Capitalization

The listing of Circle on the public market marks a growing demand from institutions for regulated crypto infrastructure. However, the sustainability of its valuation primarily depends on the core revenue engine related to the total supply of USDC.

This article will analyze Circle's valuation structure from a data perspective. Over 95% of Circle's revenue comes from USDC-related channels, making it highly sensitive to short-term interest rates and the total circulation of USDC. We will first conduct a structural decomposition of the USDC supply curve, analyzing changes in chain-level concentration, capital liquidity, and turning points under specific market conditions to identify the key variables driving minting activities.

Next, we introduced a recalibrated autoregressive model that can predict weekly supply volumes, with an error margin of approximately ±1.5%, and directly convert the increments into EBITDA sensitivity.

Finally, we demonstrate how to use this supply metric as a real-time tradable signal, providing market participants with a real-time proxy for Circle's fundamental dynamics.

Circle Valuation Structure Analysis

Based on a market capitalization of $58.2 billion, Circle's price-to-earnings ratio has exceeded Visa's by nearly 8 times. Investments from well-known institutions such as ARK Invest and BlackRock indicate that investors are not only pricing for the current fundamentals but are also betting on its potential for widespread adoption in the future.

To maintain its current valuation, Circle must continue to demonstrate a strong profit growth trajectory. Historical data shows that over 95% of Circle's revenue comes from the interest and dividends generated by its fiat asset reserves backing its stablecoin. Therefore, its revenue is highly sensitive to short-term interest rates and the circulation of USDC.

EBITDA Sensitivity Decomposition

EBITDA = (USDC supply * net interest yield ) + flow-based expenses

Among them:

• Net Interest Margin ( NIM ): Interest income earned from earning assets.
• Fees based on supply flow: Fees generated by minting and redeeming through USDC.

As the Federal Reserve approaches interest rate cuts, net interest margins will be compressed, and the market is pricing in a shift where revenue growth based on trading volume surpasses the impact of interest rate compression.

This growth relies on the continued adoption of USDC as a global payment network, and its fee capture ability will expand with the speed of use, cross-border capital flows, and ecosystem integration. Therefore, studying the supply dynamics of USDC is crucial, as it is not only a leading indicator of Circle's future revenue streams but also a core anchor point of its valuation.

Analysis of Stablecoin Supply Dynamics

Currently, the total supply of stablecoins has surged to $251 billion, reaching a historic high, an increase of 34% compared to the peak of the previous cycle in 2021. This reflects significant capital inflows and a renewed confidence in the crypto ecosystem.

USDT and USDC account for over 86% of the total supply of stablecoins. USDT leads with a market share of 62.1%, followed closely by USDC at 24.2%. Both stablecoins play fundamental roles in different ecosystems, especially USDC, whose development trajectory provides us with a more transparent view of regulated, institutional-level demand.

Stablecoin supply flow formula:

ΔSt = Mt - Rt

Among them: ΔSt: Net change in total supply of stablecoins Mt: Minting Volume ( Fiat Currency → Stablecoin ) Rt: Redemption amount ( stablecoin → Fiat )

This dynamic reveals the core logic of stablecoin supply:

• Expansion: When the minting volume exceeds the redemption volume, the supply increases.
• Contraction: When the redemption amount exceeds the minting amount, the supply decreases.

Accelerated Expansion ( 2025 and Beyond )

With Circle going public, the current circulating supply of USDC has reached a historic high of $61.2 billion. This reflects the evolution of USDC from a simple transaction stablecoin to a core financial primitive. Since 2021:

• The average daily trading volume increased by 406%, rising from $7.77 billion to $31.52 billion.
• Daily active users have rapidly increased at a compound annual growth rate of 142.92% since 2020, reflecting its rapid adoption across various ecosystems.

The growth of USDC is primarily driven by the following three forces:

1. DeFi Renaissance: The interest and participation of the crypto-native user base has surged again.
2. Traditional finance adoption: more widely accepted in the fields of settlement, cash management, and fund allocation.
3. Strategic partnership with Coinbase: Gained unparalleled distribution advantages through collaboration.

Capital efficiency reveals true value

Looking solely at the supply is not enough to reflect the actual utility of stablecoins. More importantly, it is the liquidity efficiency of stablecoin funds.

On a certain trading platform, USDT dominates with a supply of 18.9 billion USD, while the supply of USDC is 5.81 billion USD, which is about one third of USDT.

However, in terms of trading volume, the gap has nearly disappeared. In the past 30 days, the trading volume of USDT was $44.8 billion, while USDC reached $38.7 billion, just 13.6% behind.

By calculating the velocity of funds by dividing the trading volume over 30 days by the circulating supply, we can quantify capital efficiency:

Capital Velocity = 30-day Trading Volume / Circulating Supply

Applicable to USDT and USDC: USDT fund speed = 2.37 USDC fund speed = 6.66

The results show that the fund velocity of USDC is 2.81 times that of USDT, meaning that each dollar of USDC is traded nearly three times as frequently as USDT. This indicates that USDC has a faster flow of funds and higher utility, demonstrating a deeper on-chain value.

Chain-Level Growth: Expanding to Alt-VM and Layer 2

The supply growth of USDC has gradually shifted from being centered around Ethereum to a broader ecosystem, including Solana, Ethereum Layer 2, and emerging Alt-VM chains.

Data shows that the supply of USDC is increasingly distributed across a diversified ecosystem, aligning with the areas of liquidity, settlement demand, and the fastest expansion of on-chain utility.

![USDC Supply and Circle Valuation: Data Deconstruction of the Underlying Logic of the $58 Billion Market Capitalization](https://img-cdn.gateio.im/webp-social/moments-f7cdd1f905f70dda633452bd35ff3194.webp01

) The dominance of USDC on Solana

In May 2024, USDC accounted for 99.5% of the stablecoin trading volume on Solana. Even by December, when ecosystem activities were somewhat dispersed, USDC still maintained a 96% market share.

The Flippening of a certain Layer 2 ( status reversal )

In September 2024, USDC quietly surpassed USDT on a certain Layer 2, becoming the dominant stablecoin. At its peak, the supply ratio of USDT to USDC was 2.03. Today, this ratio has dropped to 0.2.

This reversal is mainly attributed to the explosive growth of a certain DEX, whose total locked value soared from 600 million USD in the fourth quarter of 2024 to 2.5 billion USD at the end of the first quarter of 2025, an increase of 417%. As of now, the bridge deposits of this DEX have reached a record high of 3.62 billion USD, marking a growth of 601% compared to the fourth quarter baseline.

This change reflects the unique structural fit between the core ecosystem of Layer 2 and its extended integrations, creating conditions for a stablecoin-dominated trend.

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USDC Supply Curve Quantitative Model: Capturing Stablecoin Supply Dynamics

Given the importance of the dynamics of USDC supply, we have constructed an autoregressive model ) AR model ( to predict the total supply of USDC. The AR model was chosen for its simplicity, transparency, and good performance in the local linear growth pattern of the USDC supply curve.

The model is recalibrated every 90 days to capture the latest market trends while ensuring that the sample size used for regression and matrix calculations is robust enough. Each prediction cycle has a dedicated model trained on a 90-day sliding window. The model uses moving averages of 1 day, 3 days, 7 days, 14 days, and 30 days as feature variables to predict the future average supply of USDC for the next n days, where n ranges from 1 to 7. The regression constant is set to zero to ensure that the model relies entirely on signal-driven data.

This method is very effective in predicting short-term directional changes in supply. Since 2022, the model has predicted that the 7-day average total supply of USDC falls within the ±1.5% range of the predicted result with an 80% probability.

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Conclusion

The listing of Circle marks an important turning point in the cryptocurrency industry. This is not just a capital raise; it also indicates the previously unmet market demand for stablecoins in the public market. Its performance highlights the deep interest of investors in compliant digital dollar infrastructure, further solidifying Circle's position as the most prominent public representative of this emerging asset class.

Currently, Circle's valuation has reached $58.2 billion, becoming a gateway for institutions to enter the regulated digital liquidity space, with USDC at the core of this ecosystem. As USDC continues to embed itself deeper into the expanding DeFi ecosystem and traditional financial systems, its role is shifting. It is no longer just a reflection of adoption rates but is becoming a real-time global liquidity barometer that can reflect capital flows, risk sentiment, and market positioning. So far, the only way to bet on this growth has been to trade Circle's stock, but the unique factors of stocks often obscure the underlying dynamics.

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