Morgan Stanley Slashes USDC Price Target to $38 Amid Stablecoin Downgrade
Morgan Stanley's downgrade of Circle to underweight and its slashed price target of $38 for USDC has sent shockwaves through the crypto market. The move reflects a sharp reassessment of Circle's earnings power, not just a minor numbers tweak.
The bank pointed to three specific factors contributing to the weaker long-term earnings path: decelerating USDC growth, mounting pressure on reserve income, and a shift toward lower-margin transaction revenue. USDC's market cap has fallen below its 2022 peak, and while it remains dominant in DeFi, that dominance hasn't translated into explosive expansion recently.
The competitive landscape has shifted, with tokenized money market funds, tokenized bank deposits, and projects like Open USD beginning to chip away at the use cases that stablecoins once owned outright. Recent tokenization milestones signal that institutions are building the rails to bypass traditional stablecoins altogether.