Circle Internet Stock Plummets 11.9%: What’s Behind the Sudden Drop This Week?

Circle's stock takes a brutal hit as investors question the stablecoin giant's trajectory.

Market Pressure Mounts

The double-digit decline reflects growing skepticism about Circle's position in the evolving crypto landscape. While the company dominates the stablecoin market with USDC, recent market movements suggest investors are looking beyond established players.

Regulatory Headwinds Bite

Increased regulatory scrutiny continues to create uncertainty for crypto-adjacent stocks. Circle's banking partnerships and compliance-first approach suddenly look less like strengths and more like vulnerabilities in a sector that's supposed to be decentralized.

Competition Intensifies

New stablecoin entrants and blockchain-native alternatives are eating into market share. The 11.9% drop signals that Wall Street might finally be realizing that in crypto, being the incumbent doesn't guarantee longevity—just ask the traditional finance dinosaurs.

Circle now faces the ultimate test: proving that a centralized entity can thrive in a decentralized ecosystem without becoming just another boring financial services company with extra steps.

U.K. banks opt for tokenization

A consortium of Britain's largest banks announced on Friday that they're moving forward with blockchain-based deposit tokens, following encouragement from Bank of England Governor Andrew Bailey.

Tokenization is the process of creating one-of-a-kind digital representations of assets, like deposits and bonds, that are recorded on a blockchain and can be stored by customers in their own digital wallets.

This approach offers many of the benefits of blockchain technology -- faster transactions, increased transparency, and better security -- without some of the risks associated with the adoption of stablecoins. Bailey specifically cautioned financial institutions last summer about creating their own stablecoins, questioning whether stablecoin alternatives are even necessary given tokenization. While not against stablecoins, he believes that they could weaken banking by removing liquidity from the system.

While President Donald Trump's Genius Act has provided clearer frameworks for stablecoins in the U.S., major banks in the U.S. appear to be leaning toward tokenization over stablecoin adoption.

Image source: Getty Images.

Circle's valuation problem deepens

Circle has been riding high on expectations that traditional finance WOULD embrace its stablecoin,, as the bridge between conventional banking and crypto. It seems -- at least for the moment -- that tokenization might curb the adoption of USDC. Circle's stock already has significant growth baked into its pricey valuation, and I would stay away.