Mizuho Downgrades Circle, Cuts Price Target to $50

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.

Circle Internet Group issues USDC, a dollar-backed stablecoin whose circulation is central to the company’s reserve-income-driven business model. Open USD emerged on June 30 with backing from more than 140 companies and a structure designed to share reserve earnings with distribution partners, raising concerns that the rival could pressure Circle’s margins and weaken its position across payments and digital-asset markets.

Bernstein on July 30 lowered its Circle price target to $140 from $190, a reduction of about 26%, while retaining its Outperform rating. The investment firm said the market had overstated the competitive threat from Open USD and expected those concerns to fade. Analysts pointed to USDC supply remaining near its historical high as evidence that Circle’s liquidity base and network effects remain resilient.

Circle (CRCL), the issuer of U.S. dollar stablecoin USDC, holds most of its reserves in interest-bearing assets such as U.S. Treasuries, so elevated interest rates generally support its interest income. Rising Middle East tensions have recently pushed oil prices higher, and the resulting inflationary pressure could delay Federal Reserve rate cuts, prompting investors to reassess Circle's earnings outlook and valuation. Circle could continue to benefit from reserve income if interest rates remain high, though its operating performance is still closely tied to USDC circulation and the path of interest rates.

During the week through July 19, 2026, Circle shares surged about 20%, with the rally linked to the Middle East conflict, higher oil prices and shifts in trader positioning. Mizuho said rising energy prices could fuel inflation and reduce the likelihood of near-term Fed rate cuts, supporting Circle's interest income from its reserves. The bank therefore raised its price target for Circle to $100 a share from $90. The stock, however, had already traded above the new target, increasing the risk of further volatility.