Bernstein cuts Circle price target to $140, says Open USD threat will fade

Quick Take

• Bernstein cut its Circle price target to $140 from $190 but kept an Outperform rating, saying the Open USD consortium threat that hammered the stock will fade.
• The firm expects Circle to post a broadly flat second quarter, with USDC supply ending Q2 at about $73 billion, down from $77 billion in Q1.

Bernstein lowered its price target on Circle (CRCL) to $140 from $190 while keeping an Outperform rating, telling clients the Open USD consortium that pressured the stock is a lesser threat than the market believes.

The note, led by analyst Gautam Chhugani and published Wednesday, previews a broadly flat second quarter for the stablecoin issuer. Circle stablecoin (USDC) ended Q2 at roughly $73 billion in supply, down from $77 billion at the end of the first quarter, though average supply rose modestly to about $76 billion, according to Bernstein.

Yet, Bernstein's lower target still implies substantial upside.

Circle closed at $64.32 on July 28, leaving the $140 target about 118% above the stock, per the note. Bernstein values Circle on a long-term discounted cash flow basis, arriving at roughly 23 times 2028 estimated adjusted EBITDA.

Why the OUSD narrative fades

The June launch of Open USD, a consortium stablecoin backed by more than 140 payments, banking, and fintech names including Visa, Mastercard, and Stripe, weighed on sentiment.

Bernstein's counter is that Circle has been signing actual memorandums of understanding with the same entities named in the alliance, from Kakao to Samsung to BNY.

Analysts pointed to a Samsung official's earlier comment that there were no formal consultations on OUSD and that the company did not know what role it would play, a remark the analysts read as undercutting the consortium's cohesion.

Visa management added to the case on its latest earnings call, saying it would remain multi-coin and multi-chain and that its role is to help clients connect to the stablecoin ecosystem rather than to pick winners.

Reserve income holds despite rate drift

Circle's revenue is naturally hedged against interest rates, in Bernstein's framing.

The average SOFR eased to 3.62% in Q2 from 3.66% in Q1, pulling the reserve return rate down to about 3.46%, while reserve income held near $655 million, up from $653 million the prior quarter.

However, the Hyperliquid arrangement remains the clearest drag on that line.

Circle and Coinbase agreed in May to share about 90% of the reserve income earned on USDC held on Hyperliquid, in exchange for USDC becoming the exchange's primary quoting, settlement and margin asset, reportedly prompting Hyperliquid to sunset its own USDH stablecoin.

USDC balances on Hyperliquid climbed from $5 billion in mid-May to more than $6 billion, generating an estimated $210 million in annualized gross reserve income, of which roughly $190 million is redirected to the exchange each year, according to the note. The full margin impact lands from the third quarter.

Supply estimates cut, thesis intact

Bernstein slashed its end-of-2026 USDC supply estimate by 37% to $83 billion and its 2028 figure by 40% to about $170 billion, adjusting for crypto market weakness while keeping its 10-year supply growth rate at 32%. The revisions cut reserve income estimates for 2026 through 2028, lowering the firm's 2026 adjusted EBITDA forecast by 12% to $602 million and its 2026 EPS estimate to $0.92 from $1.98.

Yet, the long-run call is unchanged.

Analysts expects total stablecoin supply to reach about $4 trillion by 2035, with Circle holding roughly a 30% share. They frame USDC's regulatory lead, crypto-distribution liquidity, and expanding payments footprint as the basis for that position even as competition intensifies.

Circle's regulatory standing firmed in July, when it won final OCC approval to establish Circle National Trust, a federally regulated national trust bank that will provide digital-asset custody, reportedly the first such approval of its kind for the company. CRCL shares closed around $64.32, The Block's crypto equities page shows.

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