Investors in Circle Internet Group dream of a future where its flagship stablecoin USDC becomes the preferred currency for the burgeoning fleet of artificial intelligence agents.

For now, however, the firm is hurting from a continued slowdown in the crypto market, and the announcement of a new competitor will further pressure the stock.

When Circle reports second-quarter earnings before the bell on Wednesday, analysts tracked by FactSet expect earnings per share of 16 cents and revenue of $714 million. In the second quarter of 2025, Circle reported a $4.48 per share loss on revenue of $658 million.

The firm had a blockbuster initial-public offering in June 2025, rising 168% in its first day of trading to close at $83.23. Shares have been volatile. The stock rose as high as $135 in March but has since fallen 56% to $59.75. Shares are down 25% year to date.

Circle’s main line of business is the USDC stablecoin, a type of cryptocurrency pegged to the dollar and backed by safe assets such as Treasury bills. Stablecoins have traditionally been used to buy more volatile cryptocurrencies such as Bitcoin and as a low-cost way to make cross-border remittances.

Bulls’ support of the stock largely hinges on USDC becoming more integrated with the real economy. TD Cowen on Monday initiated coverage of Circle with a Buy rating, citing the embrace of stablecoins and blockchain technology among institutions.

Circle executives have also recently said they see USDC becoming used for payments by AI-powered agents.

The short-term investment thesis, however, is shakier. For now, stablecoin use tends to follow investor interest in crypto trading—a problem given the weak crypto market this year. Crypto trading platform Coinbase, which co-founded USDC with Circle, last week said its trading-related transaction revenues fell 21% from the quarter before amid a 25% drop in spot trading volume across the market as a whole.

Some analysts have noted that agentic stablecoin use hasn’t been nearly strong enough to fill the hole. Morgan Stanley analysts on Monday downgraded Circle to Underweight from Equal Weight and lowered their price target to $38 from $106. The analysts wrote that USDC has effectively not grown since the third quarter of last year.

Longer-term threats are looming. In June, tech and payments companies including Visa, Mastercard, Stripe, and Coinbase announced they were part of a new consortium launching a stablecoin called Open USD.

Some banks have also experimented with tokenized deposits, and between new stablecoins and the bank tokens, USDC could face increasing competition over the next couple years.