- Some Wall Street firms downgraded Circle.
- Analysts warn USDC faces growing competition.
- Open USD could pressure Circle's revenue model.
- Other analysts remain optimistic on Circle's future.
Wall Street analysts are becoming increasingly cautious on Circle as competition intensifies in the stablecoin market.
Mizuho downgraded the company's stock and sharply lowered its price target, while JPMorgan reduced earnings estimates for both Circle and Coinbase. Both firms believe Circle's USDC business model is facing mounting pressure as distributors demand a larger share of stablecoin revenue.
Much of the concern centers around Open USD, a newly announced stablecoin backed by more than 140 financial and technology companies. Unlike Circle's model, Open USD plans to distribute most reserve income to its partners, potentially forcing Circle to offer more favorable revenue-sharing agreements.
Analysts also point to Circle's upcoming partnership renewal with Coinbase as another key risk, especially since Coinbase is also a founding member of Open USD.
Not everyone agrees with the bearish outlook. Bernstein and William Blair argue that Circle's regulatory position, network effects, and liquidity give it a significant competitive advantage that will be difficult for rivals to replicate.
