Morgan Stanley Slashes Circle Price Target by 64% Amid Stablecoin Turmoil
Morgan Stanley recently downgraded Circle, the issuer of the popular stablecoin USDC, to 'underweight' and cut its price target from $106 to $38. This represents a significant 64% reduction in value.
The move reflects Morgan Stanley's reassessment of Circle's earnings power, rather than just a minor adjustment. The bank pointed out three key factors contributing to the weaker long-term earnings path for Circle: decelerating USDC growth, increasing pressure on reserve income, and a shift towards lower-margin transaction revenue.
The stablecoin market is maturing, leading to thinner economics rather than fatter ones. New competitors are emerging, including tokenized money market funds, tokenized bank deposits, and projects like Open USD. These alternatives are chipping away at the use cases that traditional stablecoins once dominated.