Mizuho trimmed its target price by over 41 percent, from $85 to $50. Mizuho analyst Dan Dolev emphasized that the biggest threat facing Circle is the new dollar-backed stablecoin Open USD. The project is launched with the support of more than 140 finance, technology and crypto companies, including Visa, Mastercard, Stripe, BlackRock and Coinbase.
Unlike the model in which Circle keeps about 38 percent of reserve revenue after sharing revenue with partners like Coinbase and Binance, Open USD is built on a pass-through model that directs almost all of its reserve revenue to distributors, leaving it with only a small management fee. Mizuho argues this could force Circle to give up a larger share of its reserve revenue to compete. Over time, distribution partners will find the courage to demand more from Circle, Dolev wrote.
Mizuho noted that Circle's current revenue sharing agreement with Coinbase, its largest USDC distribution partner, is expected to be renewed next month. Coinbase is also a founding member of Open USD, so it may have additional leverage when negotiating new terms.
JPMorgan came to a similar conclusion from a different angle. The bank cited Circle's reviewed USDC partnership with decentralized exchange Hyperliquid as evidence that distributors are already getting more favorable terms. Under the new agreement, Coinbase will receive all reserve income tied to Hyperliquid's USDC balances and return approximately 90 percent of the return to the exchange. JPMorgan described the arrangement as a prisoner's dilemma that pushed Circle and Coinbase to offer the most attractive revenue-sharing terms to retain partners. According to the bank, Hyperliquid currently holds around $6 billion USDC, which is approximately 8 percent of the circulating supply.
Some other analysts see these concerns as exaggerated. Bernstein reiterated his bullish view and $190 target price for Circle following the launch of the Open USD consortium this month. Rather than posing a competitive threat to Circle, Open USD validates stablecoins as a growing asset class, according to the organization. Bernstein noted that Circle's liquidity, early start in regulation and network effects are not easily imitated, while other consortium-led finance projects have struggled to gain a foothold in the past.
Analysts at William Blair maintained their positive views and described Open USD as an initiative seeking a solution to a problem. Thus, the Wall Street camp was divided into two regarding Circle's position in the stablecoin market.