Dragonfly Investor: Interest Rate Cuts are Disastrous for Circle, Leading to Significant Reductions in Revenue and Profit

According to news from CoinWorld, Dragonfly investor Omar posted on X regarding interest rate cuts, stating: "Interest rate cuts are a disaster for interest-sensitive companies like Circle: A 100 basis point cut will lead to a decrease in annual total revenue of $618 million (-23%), a shrinkage in gross profit of $303 million (-30%), and a decline in profit margin of 3.3 percentage points; in terms of valuation, it will push the valuation of companies that already have an EV/annual gross profit of 42 times to further climb to 60.4 times (a premium of about 50%). To offset the impact, the circulating volume of USDC needs to increase by $28 billion (equivalent to 44% of the current $64 billion scale) to maintain the status quo. Against the backdrop of an inevitable interest rate cut, this explains why there was a massive stock sell-off of about $1.5 billion yesterday, and reveals why Circle is eager to advance new products (CPN and Circle Chain) that can generate liquid trading flows."