Circle Target Cut as AI Threatens USDC Demand

| unchainedcrypto.com
Mizuho cut its price target for Circle (CRCL) to $43 from $45 and maintained its Underperform rating, warning that AI assistants could steer users away from USDC and towards higher-yielding alternatives. The bank estimates that weaker demand could reduce USDC’s market capitalisation by $4 billion to $9 billion over the medium term and cut Circle’s reserve revenue by 10% to 20%. A chatbot test found that assistants generally recommended FDIC-insured bank accounts over USDC; even users who preferred crypto were often directed to alternatives. The test measures recommendations, not actual withdrawals. Mizuho now forecasts average USDC supply of $101 billion in 2027, down from $108 billion, and reserve revenue of $4.1 billion, compared with its previous $4.3 billion estimate. Reserve income is central to Circle: it represented about 95% of the company’s $701 million in second-quarter revenue and reserve income. Circle shares reportedly fell 3% to 7% after the report. They later closed at $81.57, around 47% above Mizuho’s target. Bernstein took the opposite view, raising its target to $145 and retaining an Outperform rating. Circle’s third-quarter results are due on November 4. The concerns centre on USDC demand and supply, not the stablecoin’s backing or redeemability.
Neutral
The news is negative for USDC’s adoption outlook: Mizuho’s projections imply lower supply and reserve revenue, while its chatbot test highlights a possible route by which AI assistants could direct users to alternatives. These concerns could weigh on sentiment and USDC circulation over the medium to long term, particularly if similar recommendations become common and are followed by users. However, the reported test does not show actual withdrawals, and Mizuho’s estimates are forecasts rather than confirmed changes in demand. Crucially, the concerns relate to USDC’s market capitalisation and use, not its backing or redeemability. As a dollar-pegged stablecoin, USDC is designed to maintain a price near $1, so the news is more likely to affect its supply and adoption than its unit price. On that price-focused basis, the expected impact on USDC itself is neutral, despite the bearish demand signal.