Recently, I noticed an interesting phenomenon. Circle’s stock price has risen by over 20% again this week, and the logic behind it is actually worth thinking through.

The trigger was the sudden escalation of the Middle East situation. Airstrikes by Israel and the U.S. against Iran directly pushed up oil prices, with WTI crude oil rising by 7 to 8 percentage points in just a few days. This may look like a geopolitical event, but the knock-on effects on financial markets run very deep.

Analysts at Mizuho Bank in Japan picked up this logic: higher oil prices will reignite inflationary pressure, which directly reduces market expectations for the Federal Reserve to cut interest rates. In other words, high oil prices mean the Federal Reserve may have to keep high interest rates for longer. This is a positive for stablecoin issuers like Circle. Why? Because Circle’s revenue mainly comes from interest earned on the U.S. government debt it holds—debt that serves as the reserves for the USDC stablecoin. The higher the interest rate, the more substantial this income becomes; conversely, rate cuts would compress it.

Mizuho Bank therefore raised Circle’s target price from $90 to $100. At the time, the stock price had already climbed to around $101.90. Analysts estimate that the reduction in expectations for rate cuts increased their revenue forecasts for Circle for 2026 and 2027 by about 1%. More importantly, according to data from the Chicago Mercantile Exchange, the probability of no rate cuts in 2026 doubled, which could further support Circle’s valuation.

What’s interesting is that during the weekend when the Middle East situation flared up, the crypto market went through intense volatility. Bitcoin once fell sharply, and overall market risk appetite clearly dropped. But later, prices stabilized; over the past 24 hours, the increase was about 0.01%, and the current trading price is around $73,000. The market’s reaction as a whole shows that while geopolitical risk can cause short-term jitters, the long-term logic is still dominated by macro factors.

This event also reflects a bigger backdrop: the policy divergence between the Bank of Japan and the Federal Reserve. Japan has been considering rate cuts, while the U.S. may need to maintain higher interest rates for longer due to inflation pressure. This policy difference has far-reaching implications for global asset allocation. For a rate-dependent project like Circle, this environment is actually favorable.

However, Mizuho Bank also reminds that the benefit of high interest rates is only a short-term phenomenon. As stablecoins become increasingly “commoditized,” long-term revenue growth may face pressure. This suggests that even investment opportunities that seem to have clear logic should be treated cautiously with regard to long-term structural changes.

Finally, it’s worth mentioning that after Circle released its Q4 earnings report last Thursday, the stock also saw a round of intense short-squeeze action, with gains exceeding 45%. This ended an 80% pullback that had lasted since last year. This short-term technical rebound, combined with long-term fundamental logic, has produced the continued rally this week. If you’re paying attention to the intersection between the stablecoin sector and Federal Reserve policy, Circle is definitely worth continued monitoring. If you’re interested, you can go check the market trends for related assets on Gate.