Circle and KakaoPay Shares Tumble 20% — Stablecoin Stock Rally Faces Valuation Reality Check

TradingKey - A strong rally in stablecoin-related stocks swept the markets in June, with shares of Circle (CRCL.US) and KakaoPay (377300.KS) more than doubling amid rising investor optimism. However, last week saw both stocks fall sharply — with Circle dropping 24.91% over five days, and KakaoPay falling 16.63%, sparking warnings from analysts over valuation risks.

As of June 30, Circle, often referred to as the “first stablecoin stock,” had surged 482.03% in the past month , though it pulled back significantly in recent trading sessions. Meanwhile, KakaoPay, which recently announced its plans to launch a Korean won-backed stablecoin, rose 102.64% over the same period, only to fall into correction territory last week.

Regulatory Momentum Drives Investor Enthusiasm

In recent weeks, governments around the world have moved aggressively on stablecoin regulation:

• Hong Kong passed a stablecoin regulatory framework last month.

• The U.S. Senate approved the GENIUS Act on June 19, aiming to create a legal structure for dollar-backed stablecoins.

• South Korea’s newly inaugurated President Lee Jae-myun is pushing for a new crypto bill that includes legalizing stablecoins.

These developments fueled a speculative wave into stablecoin-linked equities. However, despite policy tailwinds, concerns are growing that valuations may be overheating.

South Korea’s stock exchange has issued warnings about excessive speculation in related assets.

Data shows that Circle’s market cap has surpassed $40 billion, while short interest has surged to over 25% of its floating shares, indicating growing bearish sentiment among traders.

Citi analysts noted that although KakaoPay holds long-term potential, its current opportunity remains at an early stage — with limited visibility on timing and user adoption. Citi downgraded KakaoPay to “Sell”, citing overvaluation.

Some industry insiders argue that it’s still too early to assess whether stablecoin stocks are fairly valued. Regardless, once these stablecoins go live, their issuers stand to benefit from billions in potential revenue.