Circle Stock Plunges on Rival Stablecoin OUSD

Circle's stock has been under pressure lately due to increased competition from rival stablecoin OUSD, which has sparked bearish calls among Wall Street analysts. Despite its success in the crypto market, Circle's growth prospects have come into question after the launch of OUSD.

OUSD is a stablecoin supported by over 140 companies, including Visa, Mastercard, Stripe, BlackRock, BNY and Coinbase. Its revenue-sharing scheme has raised concerns that it will strain Circle's margins and increase distribution expenses.

Analysts at Mizuho have lowered their price estimate for Circle's stock to $50, citing the potential impact of OUSD on Circle's revenue. JPMorgan also cut down its expectations of earnings for Circle and Coinbase, saying that revenue sharing adjustments for USDC balances in Hyperliquid would reduce reserve income if USDC adoption is strengthened.

Circle has been expanding its regulated infrastructure despite increased competition. The company received final approval from the OCC to create Circle National Trust, a federally supervised trust bank, which will initially provide digital asset custody. However, Mizuho said this move was not enough to keep Circle's stock on track.