Author|Azuma(@azuma_eth)
The Q1 earnings report on May 11th, the CLARITY bill's Senate hurdle on May 14th, and the Federal Reserve leadership change on May 15th... Circle (CRCL) is set to face three major tests this week. Each challenge will directly impact CRCL's price movement and may even redefine its valuation logic.
In the following, Odaily Planet Daily will analyze the progress and expectations of these three key events one by one and predict their potential impact on CRCL (Odaily Note: The following content does not constitute any investment advice).
Event One: 2026 Q1 Earnings Report
Tonight at 20:00, Circle will release its 2026 first-quarter earnings report before the US stock market opens, followed by an earnings conference call.
There are three main focal points for this earnings report.
- The first is Circle's consolidated revenue and profit data for Q1 this year. Current market expectations for Circle's Q1 revenue are $715 million, with an expected earnings per share (EPS) of $0.178.
- The second is the proportion of Circle's distribution costs (primarily to Coinbase) relative to its overall revenue. This represents Circle's dependence on distribution platforms like Coinbase. This ratio has shown a slight downward trend over the past few quarters and is expected to continue this trend in Q1.
- The third is the growth status of non-interest income, meaning revenue from payments, enterprise, and on-chain businesses. This is the most important long-term data for Circle, indicating whether it can find a second major revenue stream beyond US Treasury interest.
Regarding the distribution contract with Coinbase, analysts are certain to ask about this during the earnings call, and Circle's response will be crucial. In August 2023, Circle signed a three-year contract with Coinbase, stipulating that Coinbase would receive all interest income generated by USDC on its platform, with interest from off-platform USDC split 50/50 between Coinbase and Circle.
This contract expires this August. However, last week the Coinbase CFO emphasized that the contract "renews every three years and never changes." If renewed under the original terms, it would certainly be unfavorable for Circle. Nevertheless, considering the current significant financial pressure on Coinbase and its strong reliance on Circle — all contracts are negotiated — this might be a favorable factor for Circle to seek amendment of the revenue-sharing terms.
- Odaily Note: Refer to "Q1 Net Loss of $394.1 Million, Coinbase Has No Choice But to Hold Tight to Circle's Thigh".
Personally, I am cautiously optimistic about tonight's earnings report, expecting solid performance, but the focus lies more on Circle's stance regarding the August renewal.
Event Two: CLARITY Bill's Senate Hurdle
On May 14th, US local time, the US Senate Banking Committee will hold a vote hearing on the "Clarity for Digital Assets" bill (CLARITY Act). This will be a critical step for CLARITY to subsequently pass the Senate and become formal legislation.
The CLARITY Act aims to establish a regulatory framework for digital assets, clearly distinguish the classification of digital assets, and delineate the regulatory responsibilities of the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
On July 17th last year, CLARITY passed the US House of Representatives with an overwhelming majority (vote count approximately 294–134) but encountered resistance when subsequently transferred to the Senate due to disagreements among various parties.
Controversies primarily centered around stablecoin yields, the regulatory approach to DeFi, and the ethics of the Trump family, especially the issue of stablecoin yields. Banking and crypto industries engaged in fierce debate, with Coinbase temporarily exiting negotiations, stalling the bill's progress (Recommended reading "Why Banks Insist on Banning Stablecoin Yields?").
The situation recently took a crucial turn. Senators Tom Tillis and Angela Alsbrooks have reached a compromise proposal, intending to ban yields on static stablecoin reserves but allowing rewards for actively used stablecoins.
Currently, on the prediction market Polymarket, the probability of CLARITY becoming law this year is as high as 76%, indicating relatively positive market sentiment regarding the bill's future progress.
Once CLARITY becomes formal law, it will establish a clear, functional federal regulatory framework for the US digital asset market, addressing long-standing issues of regulatory ambiguity and inconsistent enforcement. This would be a significant positive for all industry participants, including Circle. My prediction on this is relatively optimistic.
Event Three: Federal Reserve Leadership Change
On May 15th, Jerome Powell's term as Federal Reserve Chairman officially ends (he will remain as a Board member until 2028), and his successor will be Kevin Warsh.
On April 29th, the US Senate Banking Committee voted to approve Warsh's nomination. Although it hasn't been confirmed by the full Senate vote yet, that is expected to happen in the coming days.
Unlike Powell, Warsh advocates for an unconventional combination of "balance sheet reduction + interest rate cuts," supporting inflation control through quantitative tightening (QT) while lowering interest rates to provide liquidity for the real economy. He believes QT targets the financial sector, while rate cuts benefit the industrial sector.
For Circle, which still relies primarily on US Treasury interest as its main income source, a market shift towards a rate-cutting cycle would be a direct bearish factor for CRCL. Simultaneously, QT could lead to tightened financial market liquidity in the short term, suppressing the stock market.
However, Warsh himself is a cryptocurrency holder. He is the first Federal Reserve Chair in history to have directly invested in the cryptocurrency field and places extreme importance on "the digital upgrade of US financial competitiveness." Warsh has also explicitly opposed the Fed issuing an official CBDC, arguing that its credit is deeply tied to national sovereignty; if the US dollar's credibility is damaged, the CBDC would also collapse. Therefore, he hopes to bring private stablecoins like USDC into the Federal Reserve's regulatory system, making them "shadow dollars."
Therefore, from a long-term perspective, Warsh taking office could potentially provide Circle with some policy tailwinds at the operational level, aiding its expansion.
So, regarding expectations, the short-term outlook may lean towards pessimism, but the long-term view could shift to neutral or optimistic.
