Circle Stock Crashes as Rival Stablecoin Launches with Big-Name Backing

Circle's stock price plummeted by 17.55% to $63.85 on July 1, following the launch of a rival stablecoin backed by Visa, Mastercard, and Stripe.

This is the second competitive threat to Circle in recent weeks, after an announcement that the companies were planning a competing stablecoin caused a drop of 11% on June 3.

The new stablecoin has significant institutional backing, which poses a direct challenge to Circle's dominance in the market.

Circle generates nearly all its revenue from interest earned on USDC-backed reserves, rather than from switching costs or user fees. This means that if circulation of USDC declines in favor of the rival stablecoin, Circle's revenue could also drop significantly.