Circle stock plunged over 17% on Tuesday as Open USD intensified stablecoin competition and Russell index removal added pressure. Coinbase and Strategy also fell.
Crypto-related equity stocks fell sharply on Tuesday, led by Circle Internet Group Inc (NYSE: CRCL), whose shares dropped more than 17% after the launch of Open USD (OUSD), a stablecoin backed by over 140 global companies.
Meanwhile, Coinbase and Strategy also declined as Bitcoin (BTC) slipped below $59,000 in the aftermath of OUSD’s launch, adding to the broader market weakness. However, as of press time, BTC had recovered, trading above $59,000 and briefly climbing back above $60,000.
Circle Internet Group (CRCL) was among the worst-performing crypto stocks after its shares dropped more than 17%, wiping out roughly $3.6 billion in market value.
The primary factor responsible for CRCL’s slide is the launch of Open USD (OUSD) by Open Standard.
Backed by more than 140 companies, including Visa, Mastercard, Stripe, BlackRock, Coinbase, and Ripple, Open USD introduces a different business model from existing stablecoins.
Instead of allowing the issuer to retain most reserve earnings, Open USD plans to distribute most of that income among participating partners after deducting a management fee. It also promises zero-fee minting and redemption for businesses.
Open Standard’s OUSD business model challenges Circle's USDC model, whose revenue largely depends on income generated from reserves backing the stablecoin.
The second factor that adversely affected CRCL is Circle's removal from five major Russell Growth indices, including the Russell 1000 Growth, Russell 3000 Growth, and Russell Midcap Growth indexes, during FTSE Russell's annual reconstitution.
Because many institutional and passive funds track these benchmarks, the move could trigger portfolio rebalancing and reduce demand for Circle shares in the near term.
Despite the sharp sell-off, Circle CEO Jeremy Allaire reassures investors, arguing that USDC's competitive advantage extends far beyond economics.
In a post on X, Allaire said USDC has built deep network effects over nearly a decade, making it difficult for new entrants to replicate its position. He described stablecoins as "winner-take-most" platforms and warned that consortium models that distribute too much revenue may leave less capital available to invest in infrastructure and long-term growth.
Allaire also pointed to USDC's scale. Citing third-party analytics firm Artemis, he said USDC processed nearly $30 trillion in on-chain transactions during the first quarter of 2026, representing roughly 80% of all dollar-denominated stablecoin transaction volume on public blockchains, while USDT accounted for the remaining 20%.
He added that Circle expects the stablecoin market to expand significantly and said the company remains focused on growing the USDC ecosystem through partnerships with exchanges, payment companies, custodians and financial institutions.
The drop was not limited to Circle. Coinbase (COIN) fell about 4.5%, even though the exchange is among the founding partners of Open Standard.
Note that Coinbase and Circle jointly created USDC, however, their initial agreement has changed. Coinbase presently holds an equity stake in Circle, while the latter independently handles USDC’s issuance and governance.
Meanwhile, Strategy (MSTR) dropped more than 7% as Bitcoin's latest decline continued to pressure companies with heavy cryptocurrency exposure.
Adding to the pressure, TD Cowen, a US-based investment banking firm, lowered its price target on Strategy from $400 to $260. However, the firm has maintained its "Buy" rating.
Analyst Lance Vitanza said the revision reflects lower long-term Bitcoin price expectations rather than any deterioration in Strategy's business model. Meanwhile, the company still has upside potential, but the expected gains are now more moderate because of changes in Bitcoin price forecasts.
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