Circle faces significant interest rate sensitivity risk

$CRCL also conducted interest rate sensitivity calculations in the report: Based on an average yield of 3.49% and USDC circulation of $77 billion in March 2026, a 100bp interest rate decrease would reduce reserve income by approximately $773 million over the next 12 months, while distribution and transaction costs would decrease by approximately $384 million, resulting in a net impact of approximately -$389 million. Compared to the adjusted EBITDA of approximately $631 million over the recent four quarters, this interest rate shock is significant. To offset a 100bp rate cut, Circle needs approximately $29–30 billion in new average USDC circulation, or sufficient revenue generated from new businesses. Therefore, what Circle is working hard to do is add new terms to this formula: network fees, ecosystem revenue, developer fees, asset management fees. These new projects contributed $42 million in Q1, accounting for 6%. The direction is correct, but the speed needs to be faster.