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Morgan Stanley Downgrades Circle to Underweight, Slashes Price Target to $38 Amid USDC Growth Concerns

AI Market Summary
Morgan Stanley downgraded Circle to Underweight and cut its price target to $38, citing slower-than-expected USDC circulation growth and rising competition from tokenized cash products that could compress reserve-income economics. The note also highlights limited traction in real-world payment volumes and potential higher distribution costs from OpenUSD mechanics. A same-day bullish initiation from TD Cowen underscores a divided Street, but the downgrade pressures sentiment.
Impact level
● Medium
Affected assets
NCSKCRCL2USD/USDT-2.22%
AI Insight · NCSKCRCL2USD/USDTAI Insight
▼ Bearish
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On Monday, Morgan Stanley downgraded Circle Internet Group from Equal Weight to Underweight, aggressively cutting its price target from $106 to $38. According to analyst James Faucette, USDC circulation has expanded more slowly than anticipated, leading the bank to slash circulation assumptions for 2027 and 2028 by 33% and 44%, respectively. The report highlights growing competition from tokenized money market funds and deposits, which threaten Circle’s reserve-yield income. Conversely, TD Cowen initiated coverage the same day with a Buy rating and an $82 target, emphasizing Circle's expansion into broader financial infrastructure. Despite recent regulatory milestones, including a New York Department of Financial Services trust charter and a July OCC authorization, market sentiment remains divided. LSEG data indicates that 16 of 30 analysts currently maintain a Hold or Sell rating on the stablecoin issuer as of the latest reporting.
USDC
USDC+0.01%
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