Peter Schiff Warns ‘Crypto Trade Is Over’ as Circle (USDC) Falls 71% Despite Strong Q3

The outspoken critic of cryptocurrencies and gold expert, Peter Schiff, is back in the limelight by declaring “Crypto Trade Is Over’ citing the Circle Internet Group’s (NYSE: CRCL) loss of 70% from its peak in June. The Circle’s stock had plunged despite the company reporting strong Q3 earnings. However, Peter Schiff, CEO of Euro Pacific Asset Management and a well-known crypto skeptic, further added that those who bought on IPO day are still up about 25%, while early buyers at the IPO price hold gains of over 150%. Nevertheless, if the selloff continues, even early investors could see those profits vanish, he added in his post on X. 

Moreover, on his latest post, he encouraged investing in Silver by forgetting about Bitcoin. The silver is currently trading at $54 near a new all-time high. On the other hand, Bitcoin price is down today despite the cryptomarket gathering momentum briefly due to the bullish impact created by the reopening of the U.S government after a prolonged 43-day shutdown, the longest in U.S history. The veteran investors’ criticism of cryptocurrencies stems from the fact that they do not have any intrinsic value.  

Circle Stock Plunges Despite Strong Q3 Numbers

The leading financial technology company and issuer of stablecoin USDC, Circle, has reported a total revenue and reserve income increase of  66% year-over-year in the earnings report published yesterday, November 12. The company’s total revenue and reserve income are $740 million for the third quarter. The Net Income of $214 million and Adjusted EBITDA of $166 million increased by 202% and 78% year-over-year, respectively. 

The report further highlighted the company’s ecosystem developments, such as the launch of its Arc public testnet, which attracted participation from over 100 leading companies. The report further noted that the company is exploring the launch of a native Arc token. Commenting on the report, Jeremy Allaire, Co-Founder, Chief Executive Officer, and Chairman at Circle, stated that Circle continued to see accelerating adoption of USDC and their platform in the third quarter as they built the new Economic OS for the internet.

Despite the stellar Q3 numbers, the stock prices went down. The Circle is currently trading at around 86.30 per share, 12% down. The price decline prompted Peter Schiff to make scathing comments on the crypto trade. Nevertheless, the larger crypto community believes that the decline is largely attributed to the company-specific reasons and not related to the crypto market in general. 

The Inventors are Concerned About the Quality of Earnings & New Project Launches, While Ark Invest Buys the Dip

The major concern that dragged the prices down was that Circle’s income relies heavily on interest earned from the assets backing USDC. This makes the company’s profitability vulnerable to changes in interest rates. With upcoming Federal Reserve rate cuts next year, investors are concerned that the Circle’s earnings will go down as its revenue is dependent on short-term interest rates. 

Moreover, the investors are concerned about the profit margins and the 74% increase in distribution costs. Besides, lower yields on reserve assets reduced income from USDC holdings. The investors are also skeptical about the new project launches. The regulatory and execution risks tied to projects like the Arc Network and potential token launch made the investors cautious. 

Amid the price decline, Ark Invest, led by Cathie Wood, purchased Circle stock worth $30.5 million through exchange-traded funds. The buy-the-dip move by Ark Invest shows the firm’s trust in stablecoins and Circle’s future potential.