On July 15, 2026 (UTC+8), Circle Internet Group (NYSE: CRCL) closed at $63.22, up a modest 0.35% on the day after touching an intraday low of $59.29. Over the past year, CRCL has dropped 67.63%, pulling back roughly 78.8% from its 52-week high of $298.99. Just a day prior, Japanese investment bank Mizuho downgraded Circle from "Neutral" to "Underperform," slashing its price target from $85 to $50. On the same day, JPMorgan also lowered its earnings forecasts for both Circle and Coinbase.
Both bearish reports from Wall Street point to a single core variable—Open USD (OUSD).
Mizuho’s Downgrade Logic: How Does Open USD Threaten Circle’s Profit Model?
Mizuho analyst Dan Dolev stated in his report that Open USD’s business model "could fundamentally change Circle’s business model, which relies on retaining most of the Treasury yield to drive revenue."
To understand this assessment, it’s important to break down Circle’s profit structure. Circle’s core business is highly focused: users deposit dollars to mint USDC, and Circle invests all reserves in short-term US Treasuries to earn the interest spread. After splitting revenue with distribution partners like Coinbase and Binance, Circle actually retains about 38% of the reserve yield. In fiscal year 2025, Circle’s total revenue was $2.747 billion, but distribution costs paid to Coinbase alone exceeded $900 million annually.
Open USD takes a radically different approach. Governed by the Open Standard Alliance, OUSD distributes the vast majority of reserve yield directly to issuers and distributors, keeping only a small management fee for itself. The alliance includes over 140 companies, such as Visa, Mastercard, Stripe, BlackRock, Coinbase, and Google. Stripe has already announced plans to make OUSD the default stablecoin for business transactions on its platform, and Coinbase has confirmed it will integrate OUSD into the Base network.
Mizuho believes this "profit-sharing" model creates three pressures:
First, increased bargaining power for distributors. Circle’s revenue-sharing agreement with its largest distributor, Coinbase, is up for renewal in August 2026. Coinbase is also a founding member of Open USD, giving it stronger leverage in negotiations. Mizuho expects Circle’s distribution and transaction costs as a percentage of revenue to rise from 64% to 73%.
Second, ongoing margin compression. Mizuho cut its 2027 adjusted EBITDA forecast for Circle from $1.09 billion to $699 million, about 25% below the Wall Street consensus of $941 million. Even with higher interest rates assumed in the 2027 model, Mizuho still believes "this won’t be enough to offset potential price compression."
Third, valuation discount. Mizuho applies an EBITDA multiple of about 17x to Circle, a three-turn discount versus comparable firms (Visa, Mastercard, Coinbase, Robinhood), which average around 20x. The rationale: slowing USDC market cap growth and intensifying stablecoin competition.
USDC’s Growth Challenge: Shrinking Supply and Market Share Pressure
Another reason for the downgrade is USDC’s weakening growth momentum.
As of mid-July 2026, USDC’s circulating supply stands at about $73 billion, down roughly $7 billion from its March 2026 peak near $80 billion. This contraction comes amid a broader stablecoin market downturn—since May 2026, global stablecoin market cap has shrunk by about $100 billion to $3.12 trillion. In June alone, the market lost $77 billion, marking the largest single-month drop since the 2022 Terra-Luna collapse.
While USDC remains the world’s second-largest stablecoin by market cap, it faces multi-layered pressures. On one hand, declining crypto market activity has directly reduced stablecoin demand. On the other, more regulated new stablecoin issuers are entering the market, diluting existing share. Even though Circle received final approval from the US Office of the Comptroller of the Currency (OCC) on July 10, 2026, to establish the nationwide digital asset trust bank Circle National Trust, Mizuho maintains that this regulatory milestone "does not address the fundamental issues weighing on the stock price."
Consensus Amid Divergence: What’s the Real Moat?
However, Wall Street isn’t unanimously bearish.
On the day after the Open USD announcement (July 1, 2026), Bernstein reiterated its "Outperform" rating on Circle and set a $190 price target—over 200% above the then-closing price of $62.63. Bernstein argues that the scale of the Open USD alliance actually validates stablecoins as a growing asset class, rather than posing a direct threat to Circle. William Blair’s analysts also maintained an "Outperform" rating, describing OUSD as "a solution in search of a problem."
The core of this divergence lies in differing views on the source of Circle’s moat.
Bulls base their thesis on three points: First, USDC is deeply embedded in the DeFi ecosystem, the Base blockchain, and AI-powered crypto payment infrastructure, making short-term migration costly. Second, Circle undergoes monthly reserve audits by Deloitte, and its compliance framework—including MiCA certification and the OCC trust bank charter—serves as a trust barrier for institutional partners. Third, if the US enacts formal stablecoin legislation, Circle’s early regulatory advantage could translate into a valuation premium.
Bears, however, point to a deeper structural issue: stablecoin competition may be shifting from "who’s more compliant" to "who owns the largest distribution channels." The Open USD alliance is essentially a "distributor consortium"—it lets participants with payment networks (Stripe, Visa), merchant ecosystems (Shopify), and institutional capital channels (BlackRock) directly share reserve yield, incentivizing these channels to promote OUSD over USDC.
Circle’s "float-capture model" is based on the premise that issuing stablecoins is itself a valuable, scarce capability. Open USD’s logic is the opposite: issuance alone isn’t the value driver—distribution is. If the market validates this logic, Circle’s positioning as "digital dollar infrastructure" faces a fundamental challenge.
JPMorgan’s analysis confirms this trend from another angle. The bank notes that in Circle’s revised USDC partnership terms with decentralized exchange Hyperliquid, Coinbase will receive all USDC reserve yield related to Hyperliquid, then return about 90% of that yield to the DEX. JPMorgan calls this a "prisoner’s dilemma"—Circle and Coinbase are forced to compete against each other, offering the most attractive revenue-sharing terms to retain partners. Hyperliquid holds about $6 billion in USDC, roughly 8% of total circulation.
What Should Investors Watch?
In summary, Circle faces not just one-dimensional competition, but a multi-layered contest involving its profit model, distribution landscape, and industry pricing power. Key variables to monitor include:
USDC supply trends. Whether $73 billion marks a cyclical bottom or the start of a prolonged decline will directly reflect market demand and redemption pressure.
Reserve yield trajectory. Over 95% of Circle’s revenue comes from USDC reserve interest on Treasuries. Any change in the Fed’s rate path will have a multiplier effect on Circle’s profitability.
Stablecoin market share redistribution. The adoption rate of Open USD post-launch—especially real transaction volumes in the Stripe and Coinbase ecosystems—will be the litmus test for the "distribution channel advantage" thesis.
Coinbase revenue-sharing renewal outcome. The August negotiations will be a key indicator for Circle’s profit margins. A significant increase in revenue share would validate Mizuho’s core concerns.
Q2 earnings report. The market expects EPS of $0.20 for the quarter. Actual data on revenue growth, EBITDA margin, and average USDC circulation will provide a more objective reference than any analyst report.
Conclusion
Circle currently retains the world’s second-largest stablecoin, the strictest compliance framework, and the deepest DeFi integration. But the rise of Open USD marks a shift in the stablecoin industry—from "product competition" to "ecosystem competition." This is no longer about which stablecoin is safer, but about who controls distribution channels and who determines yield allocation.
For CRCL investors, the core question for the second half of 2026 may no longer be "Can USDC hold onto second place?" but rather, "In an era where distribution is king, can Circle’s moat endure?" The answer remains uncertain, but the contest is already well underway.
FAQ
Q1: Why did Mizuho downgrade Circle (CRCL) to "Underperform"?
Mizuho believes Open USD’s "yield pass-through model" distributes most reserve yield to distributors, which may force Circle to give up more revenue to partners like Coinbase, compressing margins. Mizuho cut its 2027 EBITDA forecast for Circle from $1.09 billion to $699 million, and slashed its price target from $85 to $50.
Q2: What is Open USD? How is it different from USDC?
Open USD (OUSD) is a dollar stablecoin launched on June 30, 2026, by the Open Standard Alliance, which includes over 140 companies such as Visa, Stripe, BlackRock, and Coinbase. Unlike Circle, which retains most reserve yield, OUSD distributes the vast majority of reserve yield to distribution partners, keeping only a small management fee.
Q3: What is USDC’s current circulating supply and market share?
As of mid-July 2026, USDC’s circulating supply is about $73 billion, down from a peak near $80 billion in March 2026. USDC is the world’s second-largest dollar stablecoin, behind Tether’s USDT (about $1.84 trillion).
Q4: What impact does Circle’s OCC trust bank license have on its stock price?
On July 10, 2026, Circle received final OCC approval to establish a nationwide digital asset trust bank, sending its pre-market stock price up over 10%. However, Mizuho argues this approval does not resolve the core issues of slowing USDC growth and intensifying competition, and the stock quickly gave back most of its gains.
Q5: What is the analyst consensus for Circle (CRCL)?
According to a survey of 25 analysts, the consensus rating for CRCL is "Buy," with a 12-month average price target of $123.35. However, the target range is wide, from a low of $55 to a high of $243, reflecting significant divergence in market views on Circle’s outlook.
