Jefferies warns against buying the dip in Circle as Open USD raises new competition fears The investment bank said new competition from the Stripe- and Coinbase-backed stablecoin consortium could pressure USDC’s growth. – Circle shares were higher on Wednesday after Tuesday’s…
unge, but Jefferies warned that rising competition from bank- and fintech-issued stablecoins, including the new Open USD consortium, could pressure USDC’s growth and market share. – The Open USD network, backed by more than 140 firms such as Stripe, Coinbase, Visa, Mastercard and BlackRock, aims to share reserve income with participants, potentially making it an attractive alternative for payment providers. – Circle CEO Jeremy Allaire and ARK Invest’s Lorenzo Valente questioned whether a large consortium can coordinate effectively and withstand regulatory pressure, arguing that USDC’s existing network effects and regulatory footprint give it an edge over new rivals. Circle (CRCL) shares bounced 5% Wednesday after a 17% plunge, as investors are weighing whether the new Open USD stablecoin consortium backed by Stripe, Mastercard, Coinbase and BlackRock poses a lasting threat to the USDC issuer
Global brokerage Jefferies isn’t convinced the selloff has fully priced in the risks, arguing that Circle faces mounting competitive pressure as banks, payment firms and fintechs increasingly launch their own stablecoins. “Buy the dip? We wouldn’t,” the firm’s analyst team wrote in a note to clients. “CRCL headwinds are unlikely to ease,” analysts wrote, warning that competition could pressure USDC’s supply growth and market share. The authors argued that Circle, which holds roughly 25% of the $300 billion stablecoin market, is moving into a more competitive phase.
While USDC benefited from an early lead after launching in 2018, Jefferies said new entrants now have something Circle lacked in its early years: large built-in distribution networks. The launch of Open USD, backed by more than 140 companies…