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Bear Market Bites Bitcoin Unicorn Circle, Shares Plunge 80%: Report

Last Updated March 4, 2021 2:53 PM
P. H. Madore
Last Updated March 4, 2021 2:53 PM

According to reporting by The Block , the value of shares in Circle, a privately-owned crypto company, has dropped dramatically over the last year.

Frostbite: Bitcoin Unicorn Circle Suffers Sinking Valuation amid Crypto Winter

Referencing a platform called SharesPost , the report indicates that the stock has dropped from an opening price of $16.23 to $3.80 as of today. SharesPost enables accredited investors to buy and sell shares in private companies.

Earlier, R3 advisor Tim Swanson tweeted that more major cryptocurrency companies are trading well below their most recent valuations in the secondary markets.

Circle’s previous high of $16.23 was during its Series E funding round, in which it raised $110 million. This figure far dwarfed all previous rounds, combined worth $86 million, according to Crunchbase .

Poloniex Drops After Circle Acquisition

Circle’s ill-fated acquisition of Poloniex may play a hand in the devaluation. Poloniex used to be one of the top markets for altcoins, but it has stagnated and dropped off since the acquisition, which entails various KYC requirements Poloniex didn’t previously enforce.

Poloniex also ended margin trading for US clients, one of its most attractive features for an altcoin platform. 24-hour volume for Poloniex at press time was just $6 million. Meanwhile, Binance, one of the few Bitcoin exchanges that has as many listings as Poloniex, saw a volume of over half a billion dollars. Some markets on Poloniex trade less than $10 over the course of a 24-hour period.

Some markets trade pitifully low volumes, considering Poloniex remains a top-100 exchange.

The Block’s sources say Circle’s business model is “hard to value” in the same way as Bitcoin exchanges or conventional tech companies.

USD Coin Stablecoin Going Well for Circle

One of the interesting gambits of Circle has been USD Coin, which stands out among competitors launched at the same time. It has a higher usage and market capitalization than both Paxos Standard and Gemini Dollar. Importantly, unlike the other two, this reporter has yet to get negative reports regarding USDC’s redemption policies or liquidity issues.

Circle said in a blog post recently that three more companies – in addition to over 100 exchanges – have joined the USDC ecosystem.

“These companies join the nearly 100 exchanges, protocols, platforms, applications, wallets and service providers that are part of the USDC ecosystem. Since it was launched in the fall of 2018, USDC has been growing rapidly: Its market cap is over $300 million (including Circle activity) and it is the second largest stablecoin by market cap. It’s also a top 20 crypto asset.”

Of all the stablecoins introduced in 2018, USDC stands out as one that might have a real shot at challenging Tether over the long-term.

Besides Poloniex, there are several factors at play in regards to the valuation of Circle. For one thing, an overall down market for cryptocurrencies makes the seas stormy for all related companies. Lower prices and apparent decreased volatility in Bitcoin markets means that profits are bound to be down. Circle claims to have done reasonably well during the sustained bear market of 2018, posting $24 billion in over-the-counter trades over the course of the year.

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