A technical 'breakaway gap' suggests a new stock uptrend may have started after the stablecoin issuer reported a fivefold jump in a key profitability metric.
Shares of Circle Internet Corp. surged Wednesday to their best day since just after the stablecoin issuer went public last year, after it provided investors with something to cheer about - accelerating profitability and sales.
Circle's stock (CRCL) - along with others in the cryptocurrency world - has been suffering in recent months as bitcoin (BTCUSD) tumbled to trade this month at its lowest prices in 16 months. Bitcoin jumped 7.6% on Wednesday but was still down 21.3% this year.
Through Tuesday, Circle's stock had bounced more than 20% since closing at a record low on Feb. 5 but had still shed 23% this year and remained mired in a downtrend.
That selloff is in stark contrast to how Circle started its public life on June 5, 2025, when it closed its first day 168.5% above its IPO price, then tripled before peaking at $263.45 on June 23.
On Wednesday, the stock shot up 35.5%, to a six-week high and its biggest gain since it climbed 33.8% on June 18, 2025.
There was a fundamental as well as a technical component to the stock's rally.
The company reported fourth-quarter total revenue that grew 77% from a year ago to $770.2 million. That beat the average analyst revenue estimate compiled by FactSet of $747.9 million.
Circulation of its USDC digital currency increased 72% to $75.3 billion as of the end of 2025, as USDC minted rose 107% to $82.4 billion and USDC redeemed was up 157% to $80.9 billion.
And adjusted earnings before interest, taxes, depreciation and amortization - a closely followed measure of underlying profitability - soared 412% from last year to $167 million, or well above the FactSet consensus of $130.2 million.
RLDC margin, which is a gauge of profitability on revenue, less distribution costs, improved to 40% from 29.96%.
Seaport Research analyst Jeff Cantwell wrote in emailed comments to MarketWatch that the strong quarterly results confirmed "USDC continues to scale rapidly and the company is becoming increasingly profitable." He believes Circle will continue to grow quickly, while also diversifying its business.
Earlier this month, Circle and prediction-market giant Polymarket announced a partnership in which Polymarket would expand the use of USDC as the core collateral and settlement asset for its markets.
Mizuho analyst Dan Dolev, who raised his rating on the stock after the Polymarket announcement, wrote in emailed comments to MarketWatch that the results show Circle is doing well, and the stock's rally suggests the market now realizes the long-term potential of digital commerce powered by artificial-intelligence agents.
From a technical perspective, the stock appears to have broken out of a downtrend it had been mired in since July, which intensified along with the crypto selloff that kicked in late last year.
The stock not only produced a big gap between where it opened on Wednesday ($73.77) and where it had closed on Tuesday ($61.37), it also opened above a downtrend line that started on July 22 and connected multiple trading peaks along the way.
That type of breakout rally at the open is often referred to by chart watchers as a "breakaway gap," which many feel depicts not only the end of one trend, but the start of another.
That suggests that a test of a key resistance zone between about $110 and $123 could be in the works. That area had previously been a strong support area that gave way in early November, when the crypto selling really kicked in.
"We think investors should be long Circle," William Blair analyst Andrew Jeffrey wrote in a note to clients, as the stock is on a "short list" of high-quality publicly traded crypto-infrastructure plays.
He believes the company is "increasingly controlling its own destiny," as it focuses on boosting RLDC margins and profitability, even if USDC volumes slow.
Comments