🔍 Wall Street is cautious about Circle’s move: the USDC economic model is under pressure

Mizuho downgraded Circle’s rating to underperform the market, cutting its price target to $50, and JPMorgan also lowered its earnings outlook. Both institutions point to the same target: USDC’s economic model is being squeezed.
The issue lies in the revenue transmission mechanism. Mizuho specifically flagged Open USD, saying it will route more reserve revenue to distributors, directly compressing Circle’s profit margins. JPMorgan, meanwhile, noted that Hyperliquid’s cooperation with Circle and Coinbase creates a “prisoner’s dilemma,” further weakening USDC’s revenue moat.
As a benchmark compliant stablecoin, USDC’s economic sustainability directly affects institutional adoption confidence. If Circle is forced to cut fees or give channels more favorable terms, the reserve income distribution framework will change, which in turn could affect the entire stablecoin market’s pricing logic.
The downside risk is equally clear: Wall Street’s bearishness could become self-fulfilling. Once cracks appear in market trust in USDC, funds may accelerate toward USDT or other emerging compliant stablecoins. Circle needs to prove that, in an increasingly competitive environment, its reserve management and channel strategy can still maintain healthy profit margins.
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