Mizuho Analyst Dan Dolev Maintains Circle Underweight Rating, Points Out Deteriorating Fundamentals
Mizuho Securities analyst Dan Dolev stated in an interview with Bloomberg that he will continue to maintain an underweight rating on Circle, believing that its only current growth logic is the revenue increase brought by rising interest rates.
He pointed out that multiple fundamental factors are deteriorating, with low hopes for the passage of the CLARITY Act this year, a weak Bitcoin market, and competitive pressure on USDC from the OpenUSD alliance, which consists of over 140 banks and financial institutions. Dolev does not have a bearish outlook on the stablecoin sector, but believes Circle's business model may be difficult to sustain in the long term.
Event-driven funds are shifting from stablecoin issuers like Circle, which rely on interest and reserve income, to alliance models with better distribution advantages, benefiting participants related to OpenUSD while putting pressure on Circle's shareholders.
Source: Public Information
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Dan Dolev has previously lowered Circle's target price multiple times and given it an underweight or weaker than market rating, with core concerns always revolving around its reliance on U.S. Treasury yields for its business model, as well as distribution partners (especially Coinbase) potentially demanding higher shares; OpenUSD is driven by over 140 institutions including Visa, Mastercard, BlackRock, and Coinbase, adopting a model that allocates almost all reserve income to partners.
On the capital path, Circle drives profits by retaining about 38% of reserve income, while OpenUSD allocates more income to distributors, motivated by the desire to capture the network effects of USDC with better economic conditions; resources are shifting from a single issuer to a multi-party alliance, which may force Circle to increase its share ratio in renewals.
Similar cases can be seen with new stablecoins like PayPal's PYUSD and Ripple's RLUSD eroding market share, as well as traditional payment giants entering the crypto infrastructure; Circle is currently in a transition phase from first-mover advantage to facing institutional-level competition.
Essentially, this represents a transfer of pricing power: stablecoin income is shifting from centralized retention by issuers to shared distribution networks, with the mechanism being that large banks and payment alliances attract liquidity with better shares, reducing the bargaining power of a single issuer.
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- Rising interest rates cannot support the flaws in the business model
- Alliance distribution is harder to replace than single issuance
- The value of stablecoins lies in the network, not in the issuer.