JPMorgan’s underweight rating for Circle—with an $80 price target by late 2026—stems from intensifying competition in the stablecoin sector. While Circle’s USDC is a market leader, rivals like Tether (USDT) and PayPal’s PYUSD are gaining traction, squeezing margins. Regulatory scrutiny also looms, with potential stablecoin legislation threatening Circle’s operational flexibility.
The bank warned that Circle’s revenue model, reliant on interest from reserve assets, faces pressure if rates decline or if competitors undercut fees. JPMorgan’s analysis suggests Circle’s valuation already reflects its dominance, leaving limited upside without new revenue streams or geographic expansion. The rating implies caution despite Circle’s solid positioning.
Circle’s response to these challenges—such as diversifying into blockchain services or compliance tools—could mitigate risks. However, JPMorgan’s stance highlights how even sector leaders aren’t immune to market saturation and regulatory headwinds in the evolving stablecoin landscape.
