JPMorgan analysts downgraded their forecasts for Circle and Coinbase amid the partnership with Hyperliquid.
A new agreement between Circle, Coinbase, and the Hyperliquid platform threatens the economics of the USDC stablecoin and creates serious risks for both companies. This is the conclusion reached by JPMorgan experts, who have revised their revenue forecasts for these players.
In May, Coinbase and Circle updated their partnership terms with Hyperliquid. The U.S. exchange now counts USDC held on the decentralized perpetual futures exchange (perp-DEX) as an asset "on the platform" and earns income from the reserves of these funds. Meanwhile, 90% of this amount is passed on to Hyperliquid. Previously, according to analysts, Coinbase shared revenue almost equally with Circle. This arrangement, experts say, resembles a "prisoner's dilemma," forcing companies to compete for USDC distribution.
Hyperliquid currently holds about $6 billion in USDC, accounting for approximately 8% of the total token supply in circulation. The platform is among the largest trading venues in the crypto industry and dominates among decentralized perpetual futures exchanges. In July, trading volume on Hyperliquid exceeded $150 billion, and its share relative to Binance grew to 11.5%. This makes it a key player capable of influencing the balance of power in the sector.
Market Pressure and USDC Prospects
Analysts also cite the weakening crypto market as an additional pressure factor. Since March, the volume of Circle's stablecoin in circulation has decreased from $80 billion to $73 billion, and the total market capitalization of the "stablecoin" sector has fallen by $10 billion since May. However, JPMorgan notes that in the long term, higher interest rates could partially support income from USDC reserves.
Despite these challenges, Circle continues to expand aggressively. On July 14, Japan's largest payment system, JCB, signed a memorandum of understanding with Circle to develop solutions based on stablecoins. The companies will explore the possibility of using USDC for cross-border payments, domestic settlements, and payments for goods from Japanese merchants, including by tourists. The first phase will be a pilot for internal fund transfers at JCB. Additionally, Circle, together with Japan's Nomura, plans to launch a USDC-based currency settlement service for local companies in 2027.
Expert Opinion: The partnership with Hyperliquid is a double-edged sword for Circle and Coinbase. On one hand, it provides access to enormous liquidity and trading volume, but on the other, it undermines their own economics and raises questions about the long-term stability of USDC. Amid declining stablecoin market capitalization and increasing competition from other platforms like Hyperliquid, Circle and Coinbase will need to find new ways to monetize, or their positions could significantly weaken.