JPMorgan and Mizuho have cut earnings forecasts for Circle and Coinbase, citing mounting pressure on stablecoin revenue models from a restructured Hyperliquid partnership and the emergence of a new yield-sharing rival, OpenUSD.
JPMorgan lowered its adjusted diluted EPS forecast for Coinbase to -$0.01, while keeping Circle’s Q2 GAAP estimate at $0.16. The downgrade reflects a “prisoner’s dilemma” created by a deal that sees Coinbase treat USDC held on Hyperliquid as on-platform. Coinbase can now collect reserve income from those balances, but must pay 90% of the float back to Hyperliquid—a stark shift from the previous near-even split with Circle. With Hyperliquid holding roughly $6 billion in USDC, or about 8% of the stablecoin’s supply, the new structure squeezes Circle’s share of reserve income.
The arrangement was announced on May 14 to expand USDC’s role on Hyperliquid’s Layer-1 DEX, but JPMorgan expects the full effect to surface only in the second half of 2026. Weaker broader crypto conditions add to the strain: total market cap fell 13%, spot trading average daily volume dropped 24%, and DeFi TVL declined 23% during the quarter. USDC supply itself shrank to about $73 billion from nearly $80 billion in March.
Meanwhile, Mizuho downgraded Circle to Underperform from Neutral, slashing its price target to $50 from $85. The Japanese bank warned that OpenUSD—a dollar-pegged stablecoin backed by over 140 partners—uses a pass-through model that redistributes reserve yield to the ecosystem. That could force Circle to share more income with distributors or risk losing market share, compressing margins even if USDC supply grows. Mizuho also cut its 2027 adjusted EBITDA estimate for Circle to $699 million, roughly 25% below consensus.
Circle shares fell 4.1% to $60.47 following the downgrade, reversing earlier gains from federal approval to establish a national crypto bank. The downgrade signals that stablecoin growth alone may not justify premium valuations if distribution economics keep shifting toward platforms and users.
