Circle's Q4 Earnings Beat Meets a 13% Short Interest Squeeze

The Earnings Print

Circle reported Q4 2025 results on February 25 that beat Wall Street estimates decisively. Earnings per share came in at $0.43, a $0.18 outperformance against the $0.25 consensus. Revenue hit $770.23 million for the quarter, a 76.9% increase year over year, pushing full-year revenue to roughly $2.7 billion.

The numbers reflect accelerating monetization of USDC's network effects. Monthly adjusted volume on USDC reached $5.9 trillion, with nearly a billion transactions in the last 30 days and active addresses above 14.5 million. The Circle Payments Network has enrolled 55 companies with 74 more in the pipeline, and annualized CPN transaction volume sits at $5.7 billion.

Positioning Was the Real Catalyst

The magnitude of the post-earnings move — CRCL is up roughly 86% over the past month — exceeds what the fundamentals alone justify. Markus Thielen of 10x Research identified positioning as the primary driver, calling it a "high-probability short squeeze." Short interest sat at approximately 13% of the float heading into earnings, equivalent to about two days to cover.

Hedge funds had built sizable bearish bets ahead of the report. When the EPS beat landed, covering kicked in and fed on itself. The stock broke above a double-bottom pivot at $88.56 on March 2, gapping 15% on that session alone, and has posted its first four-week winning streak since going public. The 50-day moving average is now tilting higher for the first time since last August.

Insiders, meanwhile, have been selling into the strength. Circle's president Heath Tarbert sold 122,007 shares at $94.23 on March 2, and director M. Michele Burns sold 25,000 shares at $105 two days later. Total insider dispositions over the past 90 days exceed $45 million.

The Rate and Regulatory Setup

A less obvious tailwind sits in the macro backdrop. Oil prices have jumped roughly 35% since late February amid the Iran conflict, and Mizuho analysts noted that sustained crude inflation could delay Fed rate cuts — a net positive for Circle, which earns yield on the Treasury and cash-equivalent reserves backing USDC's $78 billion supply. Higher rates for longer means higher revenue on a growing reserve base.

On the regulatory front, Monness Crespi reiterated a Buy with a $125 target tied to revisions in the CLARITY Act. The updated bill language would cap yield restrictions to peer-to-peer activity rather than idle balances — a structural advantage for Circle over Coinbase if it passes. The consensus price target across 22 analysts sits at $123.47, though targets range widely from Goldman Sachs at $88 to Needham at $130.

What to Watch

CRCL is still more than 60% below its post-IPO 52-week high, so there is room to run if the squeeze continues and fundamentals hold. But the P/E ratio remains negative at roughly -59, and the EBIT margin of -12.1% means Circle is not yet profitable on an operating basis despite the revenue acceleration.

The immediate question is whether the short covering has exhausted itself or if there is more fuel. Two days to cover is not an extreme figure, and the volume on Monday's session — 8 million shares — actually came in 43% below the 14.2 million daily average, suggesting some of the urgency may be fading. The $105 level where Burns sold is now support; a loss of $90 would invalidate the breakout structure entirely.

Trading on Hyperliquid

Trade CRCL on Hyperliquid with up to 5x leverage.