Bernstein Cuts Circle Target to $140 as USDC Supply Holds Near Peak

Circle Internet Group’s business is anchored by USDC, the dollar-pegged stablecoin whose reserves are held largely in cash and short-term U.S. government securities. That structure leaves revenue highly sensitive to both USDC circulation and interest rates. Tokenized money-market funds pose a growing challenge because they can give investors direct access to underlying yields, potentially drawing funds away from non-yield-bearing stablecoins and reducing Circle’s reserve base and earnings power.

Morgan Stanley downgraded Circle (NYSE: CRCL) to Underweight from Equal-weight on Aug. 3, 2026, and cut its price target to $38 from $106, a reduction of about 64%. The bank said the contraction in USDC circulation had exposed Circle’s dependence on reserve income, while tokenized funds could push its revenue mix toward lower-margin transaction businesses. Circle shares fell about 7% after the downgrade, reflecting concern that intensifying onchain competition could weaken the stablecoin issuer’s growth and profitability.

Stablecoin issuer Circle holds an important position in the crypto market through its compliant USDC token. However, the emerging stablecoin OpenUSD has entered the market with a yield-sharing model that distributes interest directly to holders, disrupting the traditional mechanism under which issuers retain all reserve income. The competition is squeezing Circle’s profit potential and challenging its revenue-sharing arrangement with Coinbase.

Japanese investment bank Mizuho downgraded Circle to underperform and cut its price target to $50 on July 15, 2026. Mizuho warned that competition from OpenUSD and the upcoming renewal of Circle’s revenue-sharing agreement with Coinbase would severely compress margins. JPMorgan also turned bearish on Circle the same day, saying rivals were eroding USDC’s market share and placing the company under heavy pressure from both valuation concerns.

Circle issues the US dollar stablecoin USDC and earns most of its revenue from interest on reserve assets. USDC can support cross-border payments and is also suited to low-value, high-frequency microtransactions between AI agents. Bernstein therefore expects stablecoins to evolve from crypto trading instruments into financial infrastructure for the internet, with Circle's growth depending on greater circulation and broader use cases.

Bernstein reiterated its “outperform” rating on Circle and its $190 price target on March 10, 2026. The target was about 70% above the March 9 closing price of $111.84, after the shares had earlier risen 9.74% that day. On March 25, Bernstein said the market had misread the CLARITY Act: its restrictions primarily targeted yield payments by distributors such as Coinbase, not Circle's interest income from USDC reserves.

Circle issues the U.S. dollar stablecoin USDC and derives most of its revenue from income on the cash and U.S. Treasury reserves backing the token. The company went public in June 2025. USDC’s rapid expansion has made Circle’s results an important gauge of stablecoin adoption and the company’s sensitivity to interest rates.

Circle reported fourth-quarter 2025 revenue of $770 million, beating market expectations. USDC in circulation exceeded $75 billion at year-end, up 72% from a year earlier. Although IPO-related stock-based compensation pushed the company to an annual loss, its shares initially rose more than 20% after the results, with the gain later approaching 50%. Bernstein also reiterated its $190 price target.