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.
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