Crypto
Home›Crypto›Stablecoins›Circle slides after Morgan Stanley downgrade and USDC…
Circle slides after Morgan Stanley downgrade and USDC outlook cut
Morgan Stanley lowered its USDC supply forecasts by about 33% for 2027 and 44% for 2028, citing weaker reserve income and higher-margin pressure.
Circle Internet shares fell after Morgan Stanley downgraded the stablecoin issuer to underweight and cut its price target to $38 from $106, with the stock down about 6% on the news. The bank said the change reflects a weaker long-term earnings outlook tied to Circle's USDC, its dollar-backed stablecoin.
Morgan Stanley reduced its forecasts for USDC supply through 2028, pointing to weaker reserve income and lower-margin revenue ahead. The bank also expects USDC growth to slow as Circle shifts toward transaction revenue, which it characterized as lower margin.
Analysts said competition in tokenized cash products and new stablecoin models could pressure Circle’s earnings by reducing USDC balances and the revenue Circle earns on reserves. Morgan Stanley cited rising competition from tokenized money market funds and tokenized deposits as key risks.
Morgan Stanley also questioned Circle's push into agentic payments, saying transaction volume has fallen to about $41,900 per day, with an implied average transaction size of roughly 24 cents. The downgrade followed concerns about Open USD, a new stablecoin model with shared governance that Morgan Stanley said could make it more expensive for Circle to maintain distribution incentives.