Morgan Stanley Downgrade Sinks CRCL Amid Bitcoin Slump

Morgan Stanley's downgrade of Circle Internet (CRCL) to 'Underweight' has led to a decline in crypto-linked equities, including CRCL, which fell over 5% in pre-market trade.

The downgrade comes on the heels of Bitcoin's drop below $63,000 and the uncertainty surrounding the Digital Asset Market Clarity Act (CLARITY), which did not appear on the Senate's agenda for this week.

Morgan Stanley analyst James Faucette downgraded CRCL to 'Underweight' from 'Equal Weight', with a price target of $38, implying a potential downside of nearly 40% from CRCL's closing price on Friday.

Faucette warned that Circle's USDC revenue model faces pressure due to slower-than-expected growth in the amount of USDC in circulation, which could lead to lower margins and reduced transaction revenue.