Circle's USDC Growth to Offset Rate Cut Impact as Stablecoin Demand Surges: Bernstein Analysis

Wall Street firm Bernstein reports that Circle (CRCL) could face revenue pressure from potential U.S. rate cuts, but growing stablecoin demand and operational efficiency should mitigate the impact. Each 25 basis point reduction in interest rates would decrease 2027 revenue by approximately 9% and EBITDA by 11%, according to analysts led by Gautam Chhugani. Even with rates below 2%, the company projects $668 million EBITDA and 33% CAGR from 2024-2027. Stablecoins like Circle's USDC and Tether's USDT serve crucial roles in crypto markets as payment infrastructure and international transfer tools. Bernstein maintains an outperform rating with $230 price target despite early trading decline to $134.40. The analysts project USDC supply could surpass $170 billion baseline as lower borrowing costs stimulate risk appetite across Binance and DeFi platforms where USDC serves as key collateral. Industry stablecoins are expected to reach ~$670 billion by 2027, with USDC capturing 33% market share. Circle's operating margins are forecast to expand from 43% to 51% by 2027 as supply grows five-fold, maintaining profitability despite reduced float income. High-margin revenue streams from integration services are rapidly increasing, already representing 9% of total revenue in conservative scenarios. Bernstein concludes that while Circle remains sensitive to rate fluctuations, strong demand growth and scaling capabilities ensure business resilience.