Morgan Stanley Puts Circle's USDC on Thin Ice

Morgan Stanley downgraded Circle to 'underweight' and slashed its price target for USDC to $38, a 64% cut from the previous $106.

The move reflects a sharp reassessment of Circle's earnings power, not just a minor numbers tweak.

The bank pointed to three factors: decelerating USDC growth, mounting pressure on reserve income, and a shift toward lower-margin transaction revenue.

Circle relies on its Treasury-heavy reserves for high-margin income, but the yield is expected to compress further.