On August 5th, Beijing Time, stablecoin issuer Circle (CRCL) will announce its new quarterly financial report before the U.S. stock market opens. However, on the eve of this quarter's financial report release, there has been a significant divergence on Wall Street regarding Circle's future value.
On August 3rd, Morgan Stanley (hereinafter referred to as "Morgan Stanley") downgraded Circle's rating from "Equal Weight" to "Underweight" and drastically lowered the target price from $106 to $38.
Meanwhile, TD Cowen initiated coverage of Circle for the first time and gave it a "Buy" rating with a target price of $82.
The two institutions provided starkly different rating assessments, with the core divergence reflecting how to define Circle at present—whether to continue viewing it as a stablecoin issuer reliant on USDC scale growth or as a tech company evolving into a digital financial infrastructure platform.
Institutional Divergence: Morgan Stanley is Bearish on USDC Growth, TD Cowen Bets on Platformization Transformation
The Morgan Stanley analyst giving the "Underweight" rating is James Faucette. On TipRanks, Faucette has a four-star rating (out of five stars) and is widely considered to be a sell-side analyst well above the average level. Although Faucette's average return rate over the past two years has been only 3.1%, his accuracy rate is as high as 60%.
Faucette's bearish logic revolves around Circle's current revenue model.
In his view, the market may have overestimated the future growth space of USDC, and the expansion rate of stablecoin use cases is slower than previously expected—since the third quarter of 2025, the circulation scale of USDC has not actually grown, and currently, aside from remittances and stablecoin-related bank card spending, USDC has not seen large-scale new use cases.
This means that Circle's most core source of revenue, "Reserve Revenue," may face growth pressure. Currently, Circle's main revenue relies heavily on allocating USDC reserve assets to cash and short-term U.S. Treasury assets to earn interest income. Therefore, the growth of USDC circulation is often seen as a key driver of the company's profit expansion.
Faucette believes that if the growth of USDC slows down, Circle's future revenue structure may gradually shift towards lower-margin transaction revenue. Based on this assessment, he expects that Circle's future profitability may be below market expectations and considers that the current valuation already reflects overly optimistic growth expectations.
Another analyst with a similar bearish view to Faucette is Dan Dolev from Mizuho Securities. Dolev, with a 4.5-star rating on TipRanks compared to Faucette, issued a "Hold" rating for Circle last Friday but lowered the target price from $50 to $45.
On the TD Cowen side, analyst Bryan C. Bergin, who gave a "Buy" rating, has a personal performance rating of only half a star on TipRanks, with a historical average return of -3.4% and a win rate of only 43%...
Bergin believes that the market may currently undervalue Circle's potential transition from a stablecoin issuer to a broader financial infrastructure platform.
Within his analytical framework, Circle's future value depends not only on the circulating supply of USDC but also on its ability to establish a more comprehensive financial services ecosystem around the stablecoin, including payment, asset management, real-world asset (RWA) tokenization, developer services, and blockchain infrastructure.
Bergin expects that by 2030, the USDC circulation will maintain an approximately 31% compound annual growth rate, while fee-based revenue growth will outpace traditional reserve-based revenue growth significantly. Additionally, the Arc network that Circle is advancing could be a potential growth catalyst, further expanding Circle's influence in the digital financial infrastructure sector.
Another Recent Key Variable: CLARITY Act Progress
In addition to the company's own business model, regulatory progress is also a crucial factor currently influencing market expectations for Circle.
Previously, the market generally viewed the CLARITY Act as a key catalyst for further development in the stablecoin industry—if this bill is eventually passed, stablecoin issuance, trading, and related financial services will receive a clearer regulatory framework, potentially reducing institutional compliance uncertainties.
However, as of now, the CLARITY Act's progress is not going smoothly. With only a few working days left until the Senate's summer recess, the market's expectation of its short-term completion has significantly decreased.
· Odaily Note: See "Just one step away, where is the Clarity Act stuck?" and "What if the CLARITY Act does not pass in the end?"
If the advancement of this act continues to be delayed, the market may reassess the commercialization speed of the stablecoin industry and the growth prospects of Circle. Therefore, the uncertainty of the CLARITY Act has become one of the key factors suppressing CRCL market sentiment before the financial report is released.
The Financial Report is Coming, and the Market is Waiting for Circle's Answer
Ultimately, Wall Street's divergence on Circle stems not from short-term performance but from different assessments of the company's future positioning. Bears are concerned about whether Circle's traditional reserve revenue model can still support its current valuation after the USDC growth slowdown, while bulls are betting that Circle can gradually grow into a digital financial infrastructure platform based on its stablecoin business.
Therefore, in this financial report, in addition to focusing on revenue and profit performance, the market will also pay close attention to reserve revenue (especially related to distribution agreements with Coinbase and other partners) as well as progress in payments, RWA, and other businesses.
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