Market Lab Report - Global liquidity dominates spurring markets to new highs; USDC/CRCL/COIN = CBDC/Treasury/Federal Reserve

Market Lab Report / Dr. K's Crypto-Corner

by Dr. Chris Kacher

The Evolution Will Not Be Centralized™

Global liquidity dominates spurring AI to new highs

The equity market reflects earnings, which remain healthy due to solid household spending, a robust labor market, and strong corporate balance sheets. The return to record highs reflects the absence of stagflation. Economists have warned all year that tariffs would crimp growth and reignite inflation, yet the data dont support this view as inflation has been offset by cooling housing and energy prices, thus the CPI and PCE have moderated.

Meanwhile, global liquidity dominates spurring stock indices and particularly AI-related names to new highs. The S&P 500 follows the growth of M2 money supply with an 11 week lag. This begs the question what stocks will continue to lead? Technology generally leads. But specifically which tech names?

Big tech tends to dominate thus the outperformance of the Magnificent 7 since 2023, but the group has been taking a breather this year after leading the markets since Jan-2023. But dont count them out since they are heavily entrenched in building and utilizing AI.

AI-related names should also continue to lead.

This includes nuclear power stocks which enable AI to scale. We have highlighted some in prior reports that had actionable entry points. The first two in the table are nuclear power ETFs. CEG is Constellation, VST is Vistra, and GEV is GE Vernova shown in the image.

Symbol Last Change Bid Ask Volume (Total) Percent Change
URAA 27.55 -0.16 27.60 27.83 4146 -0.57%
URA 38.20 0.13 38.20 38.22 317604 +0.34%

CEG 318.59 -1.58 318.33 319.15 186542 -0.49%
VST 193.27 -1.77 192.88 193.34 560807 -0.91%
GEV 522.86 3.20 522.42 523.29 247078 +0.61%
TLN 293.27 -4.61 293.05 294.73 81060 -1.55%
BWXT 143.21 0.02 143.00 143.41 50469 +0.01%
LEU 166.95 -1.70 167.00 167.99 142262 -1.01%
SMR 38.77 0.57 38.70 38.84 2100680 +1.50%
OKLO 55.31 0.05 55.27 55.36 3125264 +0.09%
NNE 34.20 -0.36 34.13 34.27 538405 -1.04%

Despite the AI hype, some analysts believe we are in a super-cycle where a new class of AI winners will take center stage, including AI power companies, AI software, and AI semis.

With global liquidity continuing to pump, and stocks on the rise, the leading stocks and cryptocurrencies benefit the most. For stocks, it is AI. For crypto, it is BTC and ETH. BTC has the greatest directional alignment with global liquidity at 83.2%, slightly ahead of the S&P 500 at 81.2%.

USDC/CRCL/COIN = CBDC/Treasury/Federal Reserve

USDC

USDC has effectively become the de facto CBDC for the U.S. dollar, while Circle (CRCL) and Coinbase (COIN) now function as critical private-sector extensions of the Treasury and Federal Reserve.

Regulatory Endorsement:
- The GENIUS Act (passed by the U.S. Senate in June 2025) establishes USDC as a federally regulated "payment stablecoin" with strict reserve requirements, monthly audits, and AML compliance 4 5 6.
- USDC is now treated as financial infrastructure, with Circle classified as a regulated institution 5 6.
Functional Replacement for CBDC:
- The U.S. government has explicitly banned CBDCs (Executive Order, January 2025), citing risks to financial privacy and sovereignty 1 2.
- USDC fills this void: it’s a digital dollar backed 1:1 by cash and U.S. Treasuries, natively supported on 23 blockchains, and integrated into global payments (Visa, Mastercard, BNY Mellon) 4 7 6.
Geopolitical Tool:
- USDC advances U.S. monetary interests globally without the transparency risks of a state-run CBDC. It counters digital yuan (e-CNY) adoption and maintains dollar hegemony through private-sector innovation 8 6.

CRCL/COIN

Monetary Power:
- Circle holds $61B in U.S. Treasuries backing USDC, effectively becoming a non-state entity managing a significant portion of U.S. debt liquidity 4 9.
- Its reserves are now subject to federal oversight, aligning with Treasury mandates 5 6.
Regulatory Capture:
- The GENIUS Act’s "anti-disintermediation safeguards" protect Circle’s dominance by barring big tech (e.g., Amazon) from issuing stablecoins without partnering with compliant entities like Circle 4 6.
- Circle’s stock (CRCL) surged 675%+ post-IPO, reflecting investor confidence in its quasi-official role 9 6.
Coinbase’s Role:
- Coinbase’s $3B crypto banking venture relies on USDC as its core stablecoin, further entrenching the Circle-Coinbase ecosystem as the private-sector arm of dollar digitalization 4 6.

Function	Treasury/Fed	Circle (CRCL)/Coinbase (COIN)
Currency Issuance	Controls physical dollar supply	Issues digital dollars (USDC)
Reserve Management	Manes U.S. debt and monetary policy	Holds $61B in U.S. Treasuries for USDC
Regulatory Oversight	Direct sovereign authority	Federally regulated under GENIUS Act
Global Dollar Expansion	Diplomatic channels	Deploys USDC via blockchain partnerships

The U.S. has outsourced digital dollar leadership to Circle and Coinbase through:

A CBDC ban protecting financial privacy 1 2.
The GENIUS Act, which anoints USDC as the compliant digital dollar 4 5 6.
Market forces driving USDC adoption over opaque alternatives like USDT 3 4.

While the Treasury and Fed retain control over traditional monetary policy, Circle and Coinbase now execute the digitization of dollar hegemony—making them indispensable to US financial strategy without formal sovereign status. This hybrid public-private model secures dollar dominance while avoiding the pitfalls of a state-controlled CBDC 8 1 6.

Feature	USDC (USD Coin)	CBDC (Central Bank Digital Currency)
Issuer	Private sector (Circle, regulated affiliates)	US government (Federal Reserve or Treasury)
Backing	1:1 by U.S. dollars or US Treasuries in private reserves	Direct liability of the central bank; backed by government reserves
Control & Governance	Managed by private company, regulated but not sovereign	Fully controlled and issued by the central bank
Technology	Runs on public blockchains (Ethereum, Solana, etc.)	May run on centralized or permissioned blockchains; not necessarily public or open-source
Legal Status	Not legal tender, but widely accepted and regulated	Legal tender; official digital form of national currency
Transparency	Subject to audits, but not government monetary policy	Full government oversight, subject to monetary policy

So the key point is that the US government cannot create USDC as they wish because it is not subject to government monetary policy while a CBDC is subject to monetary policy so can be created in any quantity. USDC is backed 1:1 by dollars while a CBDC is backed by government reserves.