Shares of Circle, the issuer of the USDC stablecoin, have surged nearly 50 percent in less than two trading sessions following the company’s fourth quarter earnings report. Analysts suggest the sharp rally was fueled more by a positioning driven short squeeze than by a fundamental revaluation of the business.
The stock had previously fallen roughly 80 percent from its record highs reached last year, leaving hedge funds and other traders with significant bearish exposure heading into the earnings release. When results exceeded expectations, those short positions were rapidly unwound, accelerating the upward move.
Market researchers estimate that hedge funds betting against Circle lost hundreds of millions of dollars as the stock climbed sharply. The rapid price increase forced short sellers to buy shares to cover positions, adding further momentum to the rally in a classic squeeze dynamic.
Circle’s earnings report showed continued growth in USDC circulation, which reached approximately 75.3 billion dollars by the end of the year, representing strong annual expansion. Revenue and income reserves rose significantly, supported by returns on U.S. government debt that backs the stablecoin’s reserves.
However, a closer look at the financials reveals mixed underlying trends. While reserve income increased, distribution and partner incentives also climbed sharply. These costs reflect the expense of expanding USDC adoption across exchanges, payment platforms and decentralized finance ecosystems.
Despite higher circulation and revenue growth, Circle reported a swing from a prior year net profit to a net loss in the most recent period. Analysts note that stablecoin issuance remains a competitive and capital intensive business, particularly as issuers share reserve income with distribution partners to drive market share.
Still, the company exceeded consensus forecasts, prompting some investment banks to raise price targets. Analysts cited optimism around prediction markets and emerging use cases in automated digital commerce, where USDC could serve as a settlement asset for high frequency and programmable transactions.
Executives highlighted increasing activity from trading and betting platforms, which generate rapid transaction flows and reinforce USDC’s role in digital marketplaces. Some analysts also pointed to the longer term potential of AI driven commerce, where stablecoins may act as the default medium of exchange for machine based transactions.
Projections for the coming years assume continued growth in USDC circulation, with reserve income closely tied to interest rate levels. Any shift in benchmark rates could materially influence profitability, given that reserve returns remain a primary revenue driver.
The stock’s powerful rebound underscores how market structure and positioning can amplify earnings reactions. While the headline results were constructive, the magnitude of the rally reflects how heavily shorted names can move when sentiment shifts abruptly, particularly in sectors tied to digital asset infrastructure and stablecoin adoption.
