The issuer of the stablecoin USDC, Circle Internet Financial, has had a notable valuation decline. Trading on the secondary market, the company’s privately held stock presently suggests a valuation of between $5 billion and $5.25 billion.
This marks a notable decline from its 2022 peak of around $9 billion. The drop comes as Circle prepares for its initial public offering (IPO).
Early investors and employees seek liquidity
Before a business goes public, employees typically have the opportunity to cash in on their stock options. This case is no exception for Circle. Early-stage investors and staff are the major sellers in these secondary market transactions.
Circle has placed a floor, prohibiting trading below a $5 billion valuation. This technique ensures that the company retains a specific market perception even before becoming public.
Market Condition and Investor Sentiment
Investors should not be concerned about the reduced valuation implied by current secondary market trades. The market is extremely low, with many investors having to raise funds rapidly, which frequently leads to sales at lower prices.
Despite this, Circle is active and growing in the USDC economy. According to a January report, USDC wallets holding at least $10 increased by 59% to around 2.7 million.
By the end of November 2023, USDC transactions had totaled $595 million. This transaction volume demonstrates USDC’s continuous utility and adoption despite market constraints. Circle submitted a private draft of S-1 paperwork with the SEC in January, indicating that it intends to go public.
Circle Makes Strategic Moves Ahead of IPO
Moreover, Circle intends to establish its new legal headquarters in the United States before the IPO. The corporation has filed paperwork to move its domicile from Ireland to the United States. This move attempts to simplify the IPO process and better connect the company with its primary market.
Circle’s secondary market valuation may have dropped, but the company continues to grow. Circle’s proposed IPO and strategic measures demonstrate its dedication to increasing its market position.
Also Read: Circle Launches Euro-Backed EURC Stablecoin on Base
