JPMorgan Analysts Flip Bullish on Circle, Citing Faster Stablecoin Growth
JPMorgan analysts upgraded Circle shares to an 'Overweight' rating, citing improved fundamentals and better-than-expected Q3 results. They raised their 2026 price target to $100, reflecting strong growth prospects for Circle's USDC stablecoin and its Arc blockchain network, which has attracted interest from major firms like Deutsche Borse and Visa. Despite increased competition and recent stock price underperformance, Circle's dominance in the stablecoin market remains stable, with regulatory compliance seen as a competitive edge. Analysts emphasized Circle's potential to monetize its infrastructure further through initiatives like a token for Arc. At the end of Q3, Circle held $9.1 billion in USDC reserves, a significant rise from $1.1 billion last year. However, they acknowledged the growing competition in the stablecoin industry and questioned whether stablecoins are a 'winner takes most' market.
Layer-1
JPMorgan Upgrades Circle's Rating and Price Target
JPMorgan analysts gave Circle shares an “Overweight” rating on Thursday, citing improvements in the stablecoin issuer’s fundamental business aspects. Circle’s Q3 results outperformed expectations, leading analysts to raise their 2026 year-end price target from $94 to $100 per share. Earlier in June, when JPMorgan began coverage of Circle, the price target was set at $80 per share.
Circle's Competitive Landscape and Growth Potential
Despite facing growing competition from Wall Street firms introducing alternatives to USDC, JPMorgan analysts noted that Circle’s success might be strengthened by major partnerships. These partnerships are linked to Circle’s layer-1 blockchain and are expected to drive the growth of USDC, its flagship stablecoin.
Circle's Arc network, which is optimized for stablecoins, is currently in the testnet phase. Leading companies like Deutsche Börse and Finastra have expressed interest in the product. Analysts remarked, “As the network strengthens, the pace of USDC adoption should grow, and the outlook for higher margins increases.” Additionally, Visa's interest in Arc underscores its potential significance.
Monetization Opportunities Through Arc and Platform Reserves
JPMorgan analysts highlighted Circle’s plans to introduce a token for Arc, providing a fresh channel for monetizing its infrastructure. This strategy is likened to Coinbase’s exploration of launching a token for its Ethereum layer-2 scaling network Base.
Circle’s revenue model also benefits from the USDC reserves held on its platform. At the end of the third quarter, Circle’s USDC reserves reached $9.1 billion, a significant increase from $1.1 billion at the end of the previous year.
Stock Performance and Market Challenges
Circle’s stock price has recently underperformed, partially due to share lockup expirations. Around 160 million shares became tradable recently, substantially increasing the share float from 50 million. On Thursday, shares were trading near $86, but over the past month, the price has dropped 37%, even as the S&P 500 advanced.
USDC Market Position Amid Competition
While USDC has lost market share to Tether’s USDT this year, analysts described Circle’s market dominance as “stable.” They emphasized that regulatory compliance is becoming essential, giving USDC a competitive edge over USDT.
Circle continues to establish itself as a key stablecoin partner for traditional firms, though analysts posed a critical question: “Are stablecoins a winner-take-most market?” They concluded, “The quicker Circle can build out its network, the more confidence we will have in the winner-take-most outlook.”