The USD Coin issuer Circle could more than double its market capitalisation to reach $75 billion or beyond in the next four years, says the chief investment officer at crypto asset management provider Bitwise Asset Management.
The New York Stock Exchange-listed Circle’s market cap currently stands at around $27.6 billion, per Yahoo Finance data.
“I can imagine scenarios where Circle is worth much more than my back-of-the-envelope 2030 estimate,” Matt Hougan wrote in a Wednesday blog post.
The bullish forecast comes as US lawmakers, bankers, and stablecoin issuers remain at loggerheads over the Clarity Act. They have clashed over whether or not stablecoin owners should be paid interest on their holdings.
Circle share prices took a tumble yesterday as markets anticipated bad news regarding the stablecoin yield question. But they have since rebounded slightly, gaining almost 3% in the past 24 hours, despite experiencing a 17% drop over the past five days.
Only Game in Town
Hougan explained his “back-of-the-envelope” calculations are based on the fact that Circle’s valuation has “grown significantly” from last year’s pre-initial public offering targets of around $7 billion.
Part of the reason for this growth, he said, is that Circle is the only game in town for stock market investors who want to put their money into the stablecoin sector.
Tether-issued stablecoin USDT’s $184 billion market value is almost 136% higher than USD Coin’s $78 billion, per DefiLlama data. However, Tether has not gone public and hasn’t announced any plans to float anytime soon.
This means traders cannot invest in Tether.
It is not just Tether that Circle has to worry about. Fintech firms and Wall Street giants are also increasingly muscling into the stablecoin market with initiatives of their own.
“One popular view is that Circle’s share of the market will decline over time as big firms like Bank of America, Stripe, and Wells Fargo get involved in stablecoins,” he wrote. “I’m not so sure. Historically, innovators do pretty well at protecting early market leads.”
No Clarity Panic
The Bitwise expert pointed to Citigroup’s September forecast for the stablecoins market, which predicted the market to grow to between $1.9 trillion and $4 trillion.
If Circle continues to corner 25% of the market in this time, maintaining or only slightly increasing its operating costs in the process, the USD Coin issuer’s worth could balloon beyond the $75 billion mark, Hougan said.
And while the stock market may be getting the jitters about the Clarity Act, Hougan said there was no reason to panic for stablecoin issuers like Circle.
There is nothing about the news that stablecoin holders may not receive yield payment that changes Citigroup’s base case forecast of the stablecoin sector’s growth to $1.9 trillion by 2030, he said.
“Interest income has not been a primary driver of stablecoin growth to date,” Hougan wrote. “The vast majority of stablecoins today are held in ways that don’t pay interest.”
Those ways include cross-border transactions, trade settlements, and lending collateral, he said.
