PayPal stablecoin bet is losing ground—just as earnings loom

PayPal’s stock is gaining momentum ahead of its Q2 earnings report, buoyed by a bullish golden cross pattern and investor hopes for improved revenue and forward guidance. But beneath the surface, the company faces pressure as its PYUSD stablecoin loses ground to rivals like USDT and RLUSD.

With growth slowing and competition rising, PayPal’s ability to turn PYUSD into a high-margin engine—especially under new regulatory tailwinds from the GENIUS Act—could be key to its long-term rebound.

PayPal’s PYUSD stablecoin is losing ground

PayPal stock price jumped and formed a golden cross last week as market participants waited for the upcoming second-quarter earnings on July 31. 

PayPal’s analysts and investors will focus on its revenue and profitability growth and its forward guidance. Yahoo Finance data show that the average revenue estimate is $8.08 billion, a 2.48% increase from the same period last year. 

Analysts also expect the company’s forward guidance for third-quarter revenue will be $8.13 billion, representing a 3.65% annualized growth. The average estimate of earnings per share is $ 1.30.

With its business slowing, investors will focus on its growth engines, especially its stablecoin business. Third-party data shows that this business is also losing ground to other stablecoins like Ripple USD, Tether USDT, and Circle’s USDT. 

The amount of PayPal USD (PYUSD) in circulation stands at $890 million, down from its all-time high of $1.02 billion. In contrast, the market capitalization of all stablecoins has jumped to over $271 billion.

USDT leads the industry with over $163 billion in assets, while USDC has over $64 billion. Notably, Ripple’s RLUSD, launched in December, has continued to gain market share as its assets have increased to over $577 million. 

PayPal hopes that its stablecoin will help to supercharge its growth, especially after the signing of the GENIUS Act. A potential catalyst for the coin is its potential to gain market share from USDT, which does not comply with several provisions of the act. 

For example, the act mandates that all USD stablecoins must be backed by US dollars or US bonds. USDT is backed by US dollar, bonds, gold, and Bitcoin. 

PYUSD’s success would help PayPal generate high-margin revenue because it earns money by investing in bonds that yield over 4% today. As such, assuming that the company invests its funds in the 10-year bonds, its $900 million in assets would generate about $36 million in revenue. 

The ongoing growth of stablecoins poses a threat to PayPal’s business. For example, sellers using its unbranded products may opt for stablecoin because of their low costs. In contrast, PayPal charges merchants from 2.89% per transaction, while stablecoins charge almost nothing.

PayPal stock price technical analysis

The daily chart shows that the PayPal stock price has rebounded over the past few months, moving from a low of $55.83 in April to $77 as of today. It has formed a highly bullish golden cross pattern, as the 50-day and 200-day moving averages have crossed each other. 

PayPal stock has also moved above the 38.2% Fibonacci Retracement level. Therefore, technicals suggest that the stock may continue rising after earnings, with the next point to watch being the 23.6% retracement point at $83.37.