LATEST: Mizuho Financial Group downgrades Circle to underperform, cuts price target to $50, citing Open USD's yield pass-through model as a margin threat to $USDC reserves.

What happened

Mizuho Financial Group downgraded Circle to "underperform" and lowered its price target for the company to $50, saying that Open USD's yield‑pass‑through model threatens the profit margin of Circle's USDC reserves.

Confirmed

Global impact / market context

If Circle's USDC reserves earn lower margins, the stablecoin could become less profitable, potentially reducing cash flow for the firm and prompting investors to reassess its valuation and growth outlook.

Analyst inference

Stablecoins like USDC rely on interest‑earning strategies to support their peg and generate revenue. Recent scrutiny of yield‑pass‑through models raises concerns that margin pressure could affect the broader stablecoin ecosystem and investor confidence.

Analyst inference

What to watch

1. Circle's next earnings report for signs of reduced net interest income, which would indicate how the Open USD model is impacting profitability. Analyst inference
2. Regulatory commentary on stablecoin reserve management, as tighter rules could further limit yield opportunities and affect USDC's cost structure. Analyst inference
3. Competitor stablecoins' yield strategies; if they maintain higher margins, investors may shift capital away from USDC toward alternatives. Analyst inference

Affected assets

• USDC — USD Coin

Evidence

• x.com