Circle Internet Group had a quarter that tells two very different stories at once. The company beat profit expectations, watched its stablecoin circulation hit record levels, and processed an almost incomprehensible volume of onchain transactions. The market’s response: a roughly 3% drop in premarket trading on May 11, 2026.

The numbers that mattered, and the one that didn’t

Circle reported Q1 2026 total revenue and reserve income of $694 million, a 20% jump year-over-year. Sounds solid until you see the consensus estimate was $715 million. In English: analysts expected $21 million more, and that gap was enough to overshadow nearly everything else.

On the profit side, Circle actually outperformed. Adjusted earnings per share came in at $0.21 against analyst expectations of $0.18. Adjusted EBITDA grew 24% to $151 million.

The messy part is net income from continuing operations, which fell 15% year-over-year to $55 million. That decline points directly at the interest rate environment. Circle’s reserve income, the money it earns by holding US Treasuries and other safe assets backing USDC, gets squeezed when rates fall.

USDC is growing. Fast.

USDC in circulation reached $77 billion in Q1, up 28% from the same period a year ago.

Onchain transaction volume is the number that probably deserves more attention than it’s getting. Circle reported $21.5 trillion in onchain transaction volume for the quarter, a 263% increase year-over-year.

The Arc token raise and what it signals

Alongside the earnings release, Circle announced it raised $222 million in a presale for its ARC token, tied to a new Layer-1 blockchain called Arc. The network was valued at $3 billion fully diluted in the raise.

A16z crypto, Apollo, and BlackRock were among the participants.

Circle maintained its full-year guidance for other revenue at $150 million to $170 million.

What this means for investors

The bull case rests on usage growth. If $21.5 trillion in quarterly transaction volume continues to expand, and if Circle can monetize that activity more directly through non-reserve revenue streams, the interest rate sensitivity becomes less of a defining characteristic. The company’s maintained guidance and the Arc capital raise suggest management believes that transition is underway.

The bear case is simpler: the 15% decline in net income from continuing operations, in a quarter where USDC usage surged 263% by volume, illustrates the disconnect between operational traction and reported profitability.