The hottest crypto stock on the planet right now is Circle Internet Group (CRCL 9.80%), which debuted on the New York Stock Exchange on June 5. In its first day of trading, Circle was up nearly 170%. At one point, Circle was up more than 200%, and trading was halted several times, as the market struggled to keep up with demand.
There are only a handful of pure play crypto stocks right now for investors, and Circle might end up being the best of them. So what is Circle, and why should it be in your portfolio?
Stablecoins
Circle is a direct play on the surging stablecoin industry, which is now valued at over $250 billion. Circle's stablecoin is USDC (USDC 0.00%), which currently has a $60 billion valuation, making it the 7th largest cryptocurrency in the world by market cap.
Thus, by getting exposure to Circle, you are getting exposure to a company that controls 25% of the rapidly growing stablecoin industry via USDC.
Image source: Getty Images.
The easiest way to think about stablecoins is that they are "digital dollars." They are typically pegged 1:1 to the U.S. dollar, and that makes them very useful as an on-ramp to the world of blockchain finance. Institutional investors are increasingly using them to move money into crypto.
Thus, the surge in the stablecoin industry over the past five years can be seen as part of a broader trend: the shift from "physical dollars" to "digital dollars" and the growing mainstream appeal of crypto.
Stablecoins have even attracted the attention of the U.S. Treasury Department, which is now viewing them as a potential policy tool to support the U.S. dollar. In one scenario that has been discussed, stablecoins might also be used to reduce the amount of interest the government pays on its debt.
Circle's growth potential
As you might have guessed by now, Circle's future growth potential is off the charts. In Ark Invest's "Big Ideas 2025" report, CEO Cathie Wood dedicated an entire section to stablecoins and their potential to reshape the financial world. The numbers are just jaw-dropping.
In 2024, for example, annualized transaction value of stablecoins hit $15.6 trillion, far surpassing the transaction values of both Visa (NYSE: V) and Mastercard (NYSE: MA). While both credit card issuers still have significantly more transaction volume, they are now behind when it comes to transaction value.
The profit-making potential of stablecoin issuers such as Circle is also noteworthy. These stablecoin issuers make money on the dollar reserves used to support their stablecoins. Typically, they take their dollars, and then invest them in low-risk assets such as U.S. Treasury bills. This creates an incredibly capital-efficient business model that churns out profits.
Over time, Ark Invest expects stablecoins to become a bigger and bigger part of the global financial system. That will create more and more opportunities for Circle.
But what about competitors?
Just keep in mind: Circle is not the only company involved in stablecoins. Its primary competitor is Tether (USDT 0.01%), which is considerably larger. In fact, Tether has a market cap of $154 billion, which represents roughly 60% of the total value of the stablecoin market.
There are plenty more competitors on the way, given just how lucrative the business is. For example, World Liberty Financial, the crypto venture affiliated with the Trump family, recently launched a stablecoin of its own earlier this year. It now has a market cap of $2 billion, meaning it now ranks among the top 40 cryptocurrencies in the world.
Moreover, stablecoins are a truly global industry. As Ark Invest points out in its report, new euro-pegged and yen-pegged stablecoins are now starting to pop up. While dollar-pegged stablecoins currently represent 98% of total stablecoin supply, it's easy to see how that percentage could decline over time, especially if global trade pressures intensify.
Millionaire-maker potential
So does Circle have millionaire-maker potential? If you look at the phenomenal growth of the stablecoin industry over the past five years, it's hard to think that it does not. In June 2020, the total value of the stablecoin industry was approximately $10 billion. Today, it's $250 billion. So it has grown 25x over a period of just five years.
By way of comparison, the price of Bitcoin (CRYPTO: BTC) in June 2020 was $10,000, and today it is over $100,000. So, while Bitcoin is growing at a multiple of 10x, stablecoins are growing at an even more rapid rate of 25x. Impressive, right?
If you think Bitcoin has millionaire-maker potential, then so does Circle. There's a good reason why Circle was the most highly anticipated crypto IPO since Coinbase Global (COIN 0.70%) in 2021. It's simply one of the best pure play crypto stocks out there, with potentially stratospheric future growth potential ahead.
