Benefiting from soaring oil prices and the Fed’s dovish rate hike expectations cooling off, the US stablecoin giant Circle’s stock has recently surged strongly, climbing nearly 8% on Tuesday to $103.71. This not only hit a nearly four-month high but also broke through the $100 target set by Mizuho Securities. Analysts point out that changes in the overall economic environment are becoming a strong catalyst for Circle’s valuation.
Mizuho analysts Dan Dolev and Alexander Jenkins raised Circle’s target price from $90 to $100 in their research report, maintaining a “Neutral” rating but showing a more optimistic outlook on the company’s profit prospects.
They noted that recent tensions in Middle Eastern geopolitics have driven crude oil prices higher, rising 6% over five trading days, with a year-to-date increase of 24%. If oil prices remain high, it could intensify inflationary pressures, potentially reducing the likelihood of the Fed starting rate cuts in 2026.
For Circle, the direction of interest rates is undoubtedly the “lifeline” affecting profitability. If the Fed maintains a “higher for longer” rate path, the interest earned on USDC reserves will be even more substantial. Mizuho analysts estimate that the fading rate cut expectations will only boost Circle’s revenue by about 1% in 2026 and 2027, but the positive impact on valuation could be greater.
According to CME’s FedWatch tool, the market’s probability of no rate cuts throughout 2026 nearly doubled in just one day. The analysts stated in the report that this shift in “right-tail risk” (the increased likelihood of extreme bullish or profit events) could lead to higher valuation premiums for Circle.
Despite the positive macroeconomic signals, Mizuho still warns that the stablecoin market faces long-term competition and commodification pressures. As regulatory clarity improves, more issuers of dollar-pegged stablecoins may enter the market, potentially squeezing profit margins.
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