USDC supply and usage return to growth, with Bernstein bullish on Circle entering a new digital-dollar expansion cycle

Overview

This report examines whether Circle and its USDC business are entering a new expansion cycle. Bernstein concludes that renewed growth in USDC supply is not an isolated phenomenon but the result of the combined effects of macro liquidity, progress in U.S. regulation, on-chain capital markets, real-world payments, and agentic payments; accordingly, the firm assigns CRCL an “Outperform” rating and a $140 price target.

Core views

The report first notes that Circle’s share price has rebounded 42% after declining amid concerns about competition from OUSD, while the USDC monetary base has also begun showing renewed signs of expansion. USDC had been flat to weak for approximately six months but added US$1.7 billion in supply over the latest week; the report’s detailed data summarizes this increase as approximately US$2 billion over the latest seven days. Bernstein believes recent crypto-market momentum may continue and that the industry may be at the beginning of a new expansion cycle driven by changes in the macro regime, real-world on-chain capital markets, broader adoption of stablecoin payments, and early applications in the agentic economy. From a macro perspective, the report emphasizes Bitcoin’s recent appreciation and the return of the “currency debasement trade.” The U.S. Treasury is intervening in the long-term Treasury market through buybacks while continuing to issue debt in the short-term Treasury market, and stablecoin reserves can absorb the additional supply of Treasury bills; stablecoin issuers have already become the 18th-largest holders of U.S. Treasuries. The report therefore views Bitcoin and stablecoins as two types of beneficiaries of the same macro-regime change: Bitcoin represents demand for “hard assets,” while stablecoins serve as a channel for absorbing short-term Treasury supply. Active Bitcoin and native crypto markets also increase demand for stablecoins used in trading and as collateral. Regulation and on-chain capital markets form the second major theme. Bernstein expects the SEC and CFTC to proactively establish rules that provide clearer regulatory frameworks for U.S.-domiciled crypto assets, tokenized equities, perpetual contracts, and prediction markets. As what the report calls the largest regulated stablecoin issuer, Circle is positioned to benefit naturally from the expansion of blockchain-driven capital markets. USDC is already used in decentralized finance, tokenized equity trading, real-world-asset perpetual contracts on Hyperliquid, and the Polymarket prediction market, while maintaining approximately 80% dominance in decentralized exchange and financial transaction volumes; the report also notes that the market capitalization of tokenized real-world assets has reached US$53 billion. The report believes the current growth cycle does not depend on the CLARITY Act passing during the September session. If the bill fails to secure Senate support in the September 15 vote, the SEC and CFTC may accelerate direct intervention, which would also create pressure on the Senate to pass the legislation. Regarding stablecoin rewards, if the bill does not pass, third parties such as Coinbase may continue to offer yields directly on balances; if it passes, rewards will be linked to user activity rather than idle balances. Bernstein concludes that both scenarios are favorable for USDC. Industry supply data supports the cycle’s resilience. Total supply of U.S. dollar stablecoins is approximately US$270 billion. In the previous cycle, the combined supply of USDC and USDT peaked at approximately US$135 billion in early 2022 before declining by about 20% through the end of 2023; in the current cycle, stablecoin supply has remained broadly flat and has begun growing again even though the total crypto-asset market capitalization is approximately 35% below its October 2025 peak. USDC and USDT continue to account for approximately 97% of total dollar-backed stablecoin supply. Despite the entry or announced entry of new participants such as PYUSD, USDG, USAT, and OUSD, the report argues that stablecoin competition requires years of development in distribution, infrastructure, and liquidity. Scale therefore remains concentrated among the incumbent leaders, with USDC retaining its leading position in the regulated stablecoin market. Changes in usage and market share are stronger than supply growth. Excluding bot and high-frequency activity, adjusted stablecoin transaction volume reached approximately US$11 trillion in 2025 and an annualized run rate of approximately US$17 trillion through July 2026, representing roughly 60% year-over-year growth. On this basis, USDC has surpassed USDT, with its share increasing from approximately 40% in 2025 to more than 60% year to date in 2026. Growth has come from multiple use cases, including centralized exchanges, decentralized finance, and wallet-to-wallet transfers; USDC’s share of wallet-to-wallet activity rose from approximately 23% in 2025 to approximately 50% year to date in 2026. On an unadjusted basis, total stablecoin transaction volume rose from approximately US$56 trillion in 2025 to an annualized level of approximately US$125 trillion through July 2026, up about 120% year over year; USDC’s share increased from 65% to 83% over the same period. Real-world payments represent another independent growth avenue. Stablecoin payment volume totaled approximately US$260 billion in the first half of 2026, compared with US$400 billion for full-year 2025, and is currently growing by about 30% year over year, accounting for approximately 3% of adjusted stablecoin transaction volume. As of June 2026, industry data showed real-world payment volume across enterprise and consumer use cases growing at approximately 20% month over month. By use case, B2B is the largest category, accounting for approximately 40% of payment volume, with roughly US$100 billion in the first half of 2026 versus US$160 billion for full-year 2025; C2C accounts for approximately 25%, with roughly US$60 billion in the first half versus US$100 billion in 2025; C2B accounts for approximately 21%, with roughly US$54 billion in the first half versus US$85 billion in 2025; and B2C, including wages and payouts, accounts for approximately 17%, with roughly US$45 billion in the first half versus US$60 billion in 2025. Circle continues to expand partnerships with banks, fintech companies, payment service providers, and technology platforms, and USDC has already been integrated by more than 70% of OUSD alliance partners. The report stresses that these partnerships are generally nonexclusive and that the truly critical factors are liquidity and regulated-market leadership, areas in which Circle retains an advantage. Agentic payments remain nascent, but the report views them as a source of long-term optional growth. In July 2026, agentic payment protocols processed approximately 19 million transactions, with x402 accounting for roughly 95% of the transaction count; the overview section of the report rounds monthly transaction volume to approximately 20 million. The corresponding monthly notional value was only about US$1 million, averaging approximately US$0.05 per transaction and therefore qualifying as nanopayments. Active merchant wallets increased from approximately 1,000 in February 2026 to roughly 10,000 in July. Bernstein expects that as new merchant services are built for the agentic internet, agentic sales endpoints could expand from approximately 10,000 merchant wallets to millions, although at present the business is not yet large enough to drive USDC supply meaningfully. Circle has built an Agent Stack around this use case, comprising agentic wallets, nanopayment orchestration, the Arc blockchain, and an agentic marketplace for service discovery. This enables AI agents to hold and control wallets, discover services, and automatically pay via x402 for digital services such as APIs, data, and software. Since its launch in May 2026, Agent Stack has accumulated more than 900 paid services, and USDC accounts for more than 99% of x402 agentic payment value. The report believes Circle’s comprehensive positioning across agentic wallets, marketplaces, Arc, and x402 nanopayments gives it an advantageous position in this early-stage market. Arc is important infrastructure for Circle’s expansion into institutional applications. Arc’s public mainnet is scheduled to launch on September 16, with founding validators including BlackRock, DTCC, Galaxy, Global Payments, ICE, Mastercard, MoneyGram, SBI, Standard Chartered, Sumitomo, and Visa. Arc intends to provide privacy-enhancing features, an agentic framework for programmable finance, and native support for tokenized real-world assets. Before the mainnet launch, it had already executed approximately 500 million transactions involving roughly 3 million wallets, maintained approximately 100% uptime, and secured more than 100 private-mainnet partners. The partnership network further connects traditional finance with real-world payments. DTCC expects to bring DTC-custodied assets on-chain through Arc to support the tokenization of traditional securities, digitally native settlement, and collateral usage; BlackRock’s BUIDL fund is expected to expand to Arc; BNY has added USDC minting and redemption to its digital-asset custody platform and continues to serve as the primary custodian of USDC reserves; and Standard Chartered provides institutional clients with integrated minting and redemption between fiat currency and USDC. Marex completed the first stablecoin initial-margin transaction in regulated derivatives clearing, allowing clients to use USDC as collateral for CFTC-regulated derivatives, which the report views as a substantive milestone in USDC becoming regulated collateral. Nium connects USDC settlement to a global payout network covering more than 190 countries; JCB is integrating Circle infrastructure into its merchant network in Japan; Grupo Bind and Kakao are respectively advancing institutional USDC access in Argentina and blockchain-payment integration in South Korea; and OSL plans to integrate 1:1 U.S. dollar-to-USDC conversion, a USDC trading zone, unified margin, and digital-dollar settlement into its trading and payment systems. Bernstein believes Circle’s OCC-approved status as a national trust bank makes it a preferred partner for large financial institutions. The financial forecasts reflect the operating results of expansion in supply, transactions, and distribution. The report forecasts reserve income rising from US$2.637 billion in 2025 to US$2.745 billion in 2026, US$3.747 billion in 2027, and US$4.868 billion in 2028; other revenue is projected to increase from US$110 million to US$192 million, US$323 million, and US$535 million, respectively. Combined revenue is expected to rise from US$2.747 billion in 2025 to US$2.937 billion in 2026, US$4.070 billion in 2027, and US$5.403 billion in 2028, representing growth of 7%, 39%, and 33%, respectively, from 2026 through 2028. Revenue less distribution costs is expected to increase from US$1.083 billion in 2025 to US$1.184 billion in 2026, US$1.585 billion in 2027, and US$2.153 billion in 2028. Operating profit is expected to shift from a US$96 million loss in 2025 to profits of US$245 million in 2026, US$543 million in 2027, and US$998 million in 2028; net income is projected to turn from a US$70 million loss in 2025 to profits of US$227 million, US$445 million, and US$796 million, respectively, with earnings per share correspondingly rising from -US$0.44 to US$0.92, US$1.79, and US$3.20. The valuation uses a long-term DCF to reflect the potential long-term expansion of the addressable market created by stablecoins in payments and stablecoin-native financial services. Bernstein applies a 10.3% weighted average cost of capital and a 2% perpetual growth rate, producing a price target of $140 per share; the implied DCF enterprise value is approximately 23 times 2028 adjusted EBITDA. Relative to the August 21, 2026 closing price of US$87.98, the report indicates 59% upside and assigns an “Outperform” rating.

Analysis framework

Bernstein first assesses the direction of the cycle using recent changes in USDC supply and crypto-market performance, then analyzes the macro transmission mechanism among Treasury operations, short-term Treasury supply, and stablecoin reserves. It subsequently constructs regulatory scenarios based on the CLARITY Act and SEC/CFTC intervention and tests actual USDC adoption using supply, adjusted transaction volume, total transaction volume, payment-use, and agentic-payment indicators. The report then examines the competitive positioning of Agent Stack, Arc, and the traditional-finance partnership network, before incorporating business expansion into its 2026–2028 financial forecasts and deriving a price target through a long-term DCF.

Methodology notes

• Valuation MethodologyDiscounted Cash Flow (DCF)

  Long-term DCF valuation

  The report discounts the cash flows generated by Circle’s future business at a 10.3% WACC and applies a 2% perpetual growth rate to reflect the long-term market opportunity in stablecoin payments and native financial services, ultimately deriving a $140 price target.

• Industry/Sector Analysis FrameworkSupply-and-Demand Framework

  Analysis of stablecoin supply, reserve-asset demand, and application demand

  The report examines USDC and industry-wide supply, the capacity to absorb short-term U.S. Treasuries, and demand generated by trading, collateral, and payment use cases to determine whether stablecoin expansion is entering a new cycle.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Growth decomposition by supply, transaction volume, payment volume, and market share

  Rather than looking only at stablecoin market capitalization, the report separately compares adjusted transaction volume, total transaction volume, real-world payment volume, individual payment categories, and USDC share to distinguish the contributions from industry growth and Circle’s market-share gains.

• Event Games and Behavioral FinanceEvent-driven analysis

  CLARITY Act and SEC/CFTC regulatory scenarios

  The report compares scenarios in which the September 15 vote passes or fails, analyzes how the pace of regulatory intervention and stablecoin reward rules would change, and concludes that both paths are relatively favorable for USDC.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Circle Internet Group (CRCL.US)

  Expansion in USDC supply, transaction share, real-world payments, on-chain capital markets, and agentic payments will increase Circle’s opportunities for reserve and non-reserve revenue.

  Strengths

  Leadership in the regulated stablecoin market; approximately 80% share of decentralized exchange and financial transaction volumes; a significant increase in USDC’s share of adjusted and total transaction volumes in 2026; ownership of Agent Stack and Arc, along with an extensive network of banking and payment partnerships.

  Weaknesses

  A relatively concentrated revenue model, with 99% driven by interest income, and continued near-term dependence on crypto capital markets; current monthly agentic payment value is only approximately US$1 million and cannot yet materially drive USDC supply.

  Comparison

  USDC and USDT together account for approximately 97% of dollar-backed stablecoin supply; year to date in 2026, USDC’s share of adjusted transaction volume has risen to more than 60%, surpassing USDT, while its share of total transaction volume has increased to 83%.

  Risks

  High volatility in digital assets, a U.S. recession or weakening crypto capital markets, intensifying competition from banks and payment institutions, and the impact of stepwise interest-rate declines on interest income.

Key data

• CRCL closing priceUS$87.98August 21, 2026 close
• Price targetUS$140.00Corresponds to the 59% upside stated in the report
• Market capitalization and enterprise valueUS$22.336 billion / US$20.623 billionMarket capitalization and enterprise value as of August 21, 2026
• 52-week price rangeUS$159.47 / US$49.90High and low prices stated in the report
• Recent increase in USDC supplyApproximately US$1.7 billion to US$2.0 billionRenewed growth over the latest seven days after approximately six months of flat-to-weak performance
• Total stablecoin supplyApproximately US$270 billionOverall size of the U.S. dollar stablecoin market
• USDC and USDT supply shareApproximately 97%Share of total dollar-backed stablecoin supply
• Adjusted stablecoin transaction volumeApproximately US$17 trillionAnnualized run rate through July 2026, versus approximately US$11 trillion in 2025, up about 60% year over year
• USDC share of adjusted transaction volumeMore than 60%Year to date in 2026, up from approximately 40% in 2025
• USDC share of wallet-to-wallet transactionsApproximately 50%Year to date in 2026, up from approximately 23% in 2025
• Total stablecoin transaction volumeApproximately US$125 trillionAnnualized run rate through July 2026, versus approximately US$56 trillion in 2025, up about 120% year over year
• USDC share of total transaction volume83%Year to date in 2026, up from 65% in 2025
• Real-world stablecoin payment volumeApproximately US$260 billionFirst half of 2026; full-year 2025 volume was US$400 billion, currently up about 30% year over year
• Payment volume as a share of adjusted transaction volumeApproximately 3%Current share of real-world payments in stablecoin usage
• B2B payment volumeApproximately US$100 billionFirst half of 2026, accounting for approximately 40% of payment volume; full-year 2025 volume was US$160 billion
• C2C payment volumeApproximately US$60 billionFirst half of 2026, accounting for approximately 25% of payment volume; full-year 2025 volume was US$100 billion
• C2B payment volumeApproximately US$54 billionFirst half of 2026, accounting for approximately 21% of payment volume; full-year 2025 volume was US$85 billion
• B2C payment volumeApproximately US$45 billionFirst half of 2026, accounting for approximately 17% of payment volume; full-year 2025 volume was US$60 billion
• Agentic payment transaction countApproximately 19 million transactionsJuly 2026; rounded to 20 million transactions in the overview section, with x402 accounting for approximately 95%
• Agentic payment valueApproximately US$1 million/monthAverage of approximately US$0.05 per transaction
• Active merchant walletsApproximately 10,000July 2026, up from approximately 1,000 in February 2026
• Number of Agent Stack servicesMore than 900Number of paid services following its May 2026 launch
• USDC share of x402 paymentsMore than 99%Based on agentic payment value
• Arc pre-launch operating dataApproximately 500 million transactions, approximately 3 million wallets, and approximately 100% uptimeThe public mainnet is scheduled to launch on September 16 and already has more than 100 private-mainnet partners
• 2028 revenue forecastUS$5.403 billionReserve income of US$4.868 billion and other revenue of US$535 million; up 33% year over year
• 2028 net income and EPS forecastUS$796 million / US$3.20Compared with a US$70 million net loss and EPS of -US$0.44 in 2025
• Key DCF assumptionsWACC 10.3%, perpetual growth rate 2%Produces a $140 price target
• Implied valuation multipleApproximately 23x EV/2028 adjusted EBITDABased on DCF enterprise value

Impact & implications

The report argues that Circle’s growth thesis is expanding beyond simple dependence on strong crypto trading activity to include regulated collateral, tokenized capital markets, cross-border and enterprise payments, and agentic nanopayments. Renewed USDC supply growth, rising transaction-volume share, and increasing traditional-finance partnerships support near-term revenue growth, while Agent Stack and Arc provide long-cycle optionality. At the same time, Circle remains highly dependent on reserve interest income and crypto capital markets, and the realization of growth remains constrained by interest rates, competition, and macro volatility.

Risks

• Digital assets have a limited price history and exhibit high-beta volatility in response to macro changes; shocks such as a U.S. recession could affect the crypto capital markets on which Circle currently depends.
• As regulation becomes clearer in the United States and globally, banks and payment institutions may enter the stablecoin market and create new competition.
• Circle’s revenue model is relatively concentrated, with 99% driven by interest income, making it sensitive to stepwise declines in interest rates.

What to watch

• Track whether USDC supply can continue expanding after growing by approximately US$1.7 billion to US$2.0 billion over the latest seven days.
• Monitor the September 15 vote on the CLARITY Act and the pace of SEC and CFTC rulemaking and intervention.
• Assess whether the approximately 20% month-over-month growth in real-world stablecoin payment volume can continue, as well as changes across B2B, C2C, C2B, and B2C use cases.
• Track monthly agentic payment transaction counts, active merchant wallets, and USDC’s share of x402 payments.
• Monitor whether Arc’s public mainnet launches as scheduled on September 16 and the progress of validators, institutional partners, and tokenized-asset applications.
• Observe changes in USDC’s market share across adjusted transaction volume, total transaction volume, wallet-to-wallet activity, and decentralized finance.