USDC Supply and Circle Valuation: Analyzing the Data Logic Behind the $58 Billion Market Capitalization

The public listing of Circle is a milestone event that highlights the growing demand from institutions for regulated crypto infrastructure. However, the sustainability of its valuation depends on the scalability of its core revenue engine, which is closely related to the total supply of USDC.

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

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

Finally, we demonstrated 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 surpassed that of a certain payment giant by nearly 8 times. The firm investments from some well-known institutional investors 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. Historically, over 95% of Circle's revenue comes from the interest and dividends generated by its stablecoin's fiat asset reserves. Therefore, its revenue is highly sensitive to short-term interest rates and the circulation of USDC.

EBITDA Sensitivity Decomposition

Circle's EBITDA is primarily composed of two parts:

1. Net interest yield: Interest income obtained from earning assets.
2. Fees based on supply flow: Fees generated from minting and redeeming through USDC.

As the interest rate cut approaches, the net interest margin will be compressed, and the market is pricing in a shift where the growth rate of revenue based on trading volume will outweigh the impact of interest rate compression.

This growth relies on the continued adoption of USDC as a global payment network, and its fee capture capability will expand with the speed of usage, cross-border capital flows, and ecosystem integration. Therefore, studying the supply dynamics of USDC is crucial. This is not only a leading indicator of Circle's future revenue streams but also a core anchor point for its valuation, providing real-time insights into the development of its business model.

Analysis of Stablecoin Supply Dynamics

Currently, the total supply of stablecoins has surged to $251 billion, setting a new all-time high, which is a 34% increase compared to the peak of the previous cycle in 2021. This growth reflects significant capital inflows and a resurgence of confidence in the crypto ecosystem.

Currently, USDT and USDC account for over 86% of the total supply of stablecoins. Among them, USDT leads with a market share of 62.1%, while USDC follows closely with 24.2%. These two stablecoins play foundational roles in different ecosystems, especially USDC, whose development trajectory provides us with a more transparent view of regulated, institutional-level demand.

The core logic of stablecoin supply can be simplified as:

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

By observing the history of USDC from the perspective of expansion and contraction, we can find that its supply changes are closely related to important turning points in the overall timeline of the cryptocurrency industry.

Accelerated Expansion

With Circle's IPO, the current circulating supply of USDC has reached a historic high of $61.2 billion. This scale reflects the evolution of USDC from a simple transactional stablecoin to a recognized core financial primitive. Since 2021:

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

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

1. The Revival of DeFi: The interest and participation of the crypto-native user base have surged again.
2. Adoption of traditional finance: gradually being accepted by a broader traditional financial audience in the fields of settlement, cash management, and fund allocation.
3. Strategic partnership with a cryptocurrency trading platform: By collaborating with one of the largest crypto user bases globally, USDC has gained unparalleled distribution advantages in retail, institutional, and on-chain ecosystems.

Capital Efficiency Reveals True Value

Looking only at the supply is not enough to reflect the actual utility of stablecoins. More importantly, the actual value of stablecoins lies in the efficiency of the flow of their funds.

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

However, in terms of trading volume, the gap has almost disappeared. In the past 30 days, the trading volume of USDT was $44.8 billion, while USDC reached $38.7 billion, trailing by only 13.6%.

By calculating the velocity of funds (i.e., the 30-day trading volume divided by the circulating supply), we can quantify capital efficiency:

The results show that the capital velocity of USDC is 2.81 times that of USDT, meaning that each dollar of USDC is traded almost three times as frequently as USDT. This indicates that USDC has a faster capital flow and higher utility, demonstrating a deeper level of 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 that have the fastest growth in liquidity, settlement demand, and 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 stablecoin trading volume on Solana. Even by December, when ecosystem activity was somewhat dispersed, USDC still maintained a 96% market share.

![USDC Supply and Circle Valuation: Data Deconstructing the Underlying Logic of $58 Billion Market Capitalization])https://img-cdn.gateio.im/webp-social/moments-40188767079338843a854fe9e8e2d204.webp(

Arbitrum's Flippening

In September 2024, USDC quietly surpassed USDT on Arbitrum, becoming the dominant stablecoin. At its peak, the supply ratio of USDT to USDC was 2.03 (meaning Tether's supply was more than twice that of USDC). Now, this ratio has fallen to 0.2.

This reversal is primarily due to the explosive growth of a certain platform, with its total locked value )TVL( skyrocketing from 600 million USD in the fourth quarter of 2024 to 2.5 billion USD by the end of the first quarter of 2025, an increase of 417%. As of now, the platform's bridging deposits have reached a historical high of 3.62 billion USD, reflecting a growth of 601% compared to the fourth quarter baseline.

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

![USDC Supply and Circle Valuation: Data Deconstructing the Underlying Logic of 58 Billion USD Market Capitalization])https://img-cdn.gateio.im/webp-social/moments-8668680c62c4fdd8db76f1e2cfe2763c.webp(

USDC Supply Curve Quantification Model: Capturing Stablecoin Supply Dynamics

Given the importance of the dynamics of USDC supply, we have built an autoregressive model (AR model) to predict the total supply of USDC. We chose the AR model because of its simplicity, transparency, and good performance in the locally 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 forecasting period has a dedicated model trained on a 90-day sliding window (7 independent regression models, each with a unique set of beta coefficients). The model uses moving averages (1 day, 3 days, 7 days, 14 days, and 30 days) as feature variables to predict the 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 is fully signal-driven.

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 forecast results with an 80% probability.

![USDC Supply and Circle Valuation: Data Deconstruction of the Underlying Logic of $58 Billion Market Capitalization])https://img-cdn.gateio.im/webp-social/moments-06fa1b82e5297bbba917ddc0cfbcc615.webp(

Conclusion

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

Currently, Circle's valuation has reached $58.2 billion, becoming a gateway for institutions entering 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 undergoing a transformation. It is no longer just a reflection of adoption rates but is becoming a real-time global liquidity barometer capable of reflecting 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 associated with the stock often obscure the underlying dynamics.