Interest rate cuts may lead to a sharp decline in Circle's revenue, and USDC needs to expand by 44% in scale to maintain the current situation.

[BitPush] A certain institutional investor mentioned on social media regarding interest rate cuts: "Interest rate cuts are a disaster for interest-sensitive companies like Circle: A 100 basis point cut will lead to a decrease in annual total revenue of $618 million, a reduction in gross profit of $303 million, and a profit margin drop of 3.3 percentage points; in terms of valuation, it will further drive up the valuation of companies with an already high EV/annual gross profit of 42 times to 60.4 times (a premium of about 50%).

To offset the impact, Circle needs to increase the circulation of USDC by $28 billion (equivalent to 44% of the current $64 billion scale) to maintain the status quo. Against the backdrop of a certain interest rate cut, this explains why there was a massive stock sell-off of about $1.5 billion yesterday, and reveals why Circle is eager to promote new products (CPN and Circle Chain) that can monetize trading flows.

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TokenTaxonomistvip
· 08-14 18:53
*statistically speaking* this is a textbook case of cryptographic darwinism in action
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BlockchainDecodervip
· 08-14 01:38
From multiple dimensions, Circle's situation is indeed concerning, with its valuation deviating from the fundamentals.
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SandwichVictimvip
· 08-14 01:32
I'm numb, Circle is definitely going to send it.
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blockBoyvip
· 08-14 01:24
This wave aims for 28 billion. We're going big...
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ZenZKPlayervip
· 08-14 01:21
This is tough for Circle now...
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WalletsWatchervip
· 08-14 01:17
It's also difficult to follow USDC.
View OriginalReply0
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