Circle stock took a sharp hit Wednesday, sliding nearly 10% even after the stablecoin issuer posted one of its strongest quarters since going public.

The company, which manages the USDC stablecoin, easily beat Wall Street’s expectations on both the top and bottom lines. Third-quarter revenue and reserve income came in at $740 million, up 66% from a year ago, topping analyst estimates of $707 million. Adjusted earnings landed at $0.64 per share, more than triple the consensus forecast.

It was a standout report… but one that couldn’t overcome a bigger concern: falling interest rates.

Most of Circle’s profits come from interest earned on the short-term Treasury bills and cash reserves that back USDC. Those yields have been a major tailwind during the Fed’s high-rate era. Now, with the central bank already in a rate-cutting cycle, investors are starting to price in what lower yields could do to profits.

Circle said its average reserve return fell to 4.15% in the quarter, down 96 basis points from the previous period. That’s not catastrophic… but it’s a clear sign that the company’s easy money from interest income is starting to taper off.

Chief Financial Officer Jeremy Fox-Geen tried to calm nerves in an interview, saying Circle is built to handle rate changes. “We’re already in a rate-cutting cycle, and through that cycle we are delivering sustained growth,” he said. He also argued that lower rates could actually help the business over time, since cheaper borrowing costs often increase investment, trading, and on-chain activity… all of which drive stablecoin use.

It’s not all wishful thinking. Circle’s USDC circulation jumped 108% from a year earlier, and its market share edged up to 29%, gaining ground on Tether, the current leader in the space. The company’s been benefiting from a wave of institutional adoption and regulatory clarity that’s helped stablecoins gain traction as a bridge between traditional banking and crypto.

Still, Circle isn’t relying solely on interest income to grow. It’s expanding deeper into financial infrastructure with Circle Payments and its new Arc blockchain platform, which already counts more than 100 companies testing its systems. These products are designed to help businesses settle payments faster and move money across blockchains securely… a move aimed at turning Circle into something closer to a crypto-era PayPal.

Analysts aren’t panicking. Seaport Research’s Jeff Cantwell reiterated a Buy rating and $280 price target, saying Circle’s partnerships with Visa, Brex, Fireblocks, and Hyperliquid should help offset any short-term revenue pressure from falling yields.

Even after Wednesday’s decline, Circle shares are still up roughly 180% since their June IPO. But the latest drop is a reminder that even in crypto, old-fashioned interest-rate anxiety still has the power to move markets.

At the time of publishing this article, Stocks.News holds positions in Bitcoin and Ethereum as mentioned in the article.