JPMorgan Cuts Circle, Coinbase Forecasts Over Hyperliquid USDC Revenue Deal

JPMorgan has lowered its earnings forecasts for Circle and Coinbase after the companies entered a new revenue-sharing agreement with Hyperliquid, warning that the deal could reshape the economics of the USDC stablecoin business over the long term.

The investment bank said the revised arrangement changes how revenue generated from USDC reserves is allocated. Under the agreement, Coinbase will classify USDC held on Hyperliquid as "on-platform" balances, allowing it to receive reserve income before returning 90% of that revenue to Hyperliquid instead of splitting it with Circle under the previous structure.

JPMorgan estimates Hyperliquid currently holds around $6 billion in USDC, representing roughly 8% of the stablecoin’s circulating supply. While the partnership is expected to accelerate USDC adoption, the bank believes it comes at the cost of lower profitability for both Circle and Coinbase.

According to JPMorgan, the agreement reflects a "prisoner’s dilemma" in which both companies are forced to sacrifice a greater share of reserve income to expand USDC distribution and remain competitive in the growing stablecoin market.

The partnership was first announced on May 14 as part of a broader initiative by Circle and Coinbase to increase USDC adoption across decentralized finance. Hyperliquid operates its own Layer-1 blockchain and decentralized exchange supporting spot and perpetual futures trading. Since June 11, USDC has become the platform’s preferred stablecoin, strengthening its role within the ecosystem.

Despite the strategic benefits, JPMorgan believes similar incentive structures could pressure margins if more distribution partners negotiate comparable revenue-sharing terms.

Wall Street remains divided on Circle's outlook. Mizuho has also turned more cautious, downgrading the company amid concerns over the long-term profitability of USDC. However, firms including Bernstein and William Blair continue to maintain bullish ratings, arguing that expanding adoption could offset near-term margin pressure.

Even with its reduced forecasts, JPMorgan still expects USDC-related earnings to grow through 2027, supported by expectations that U.S. interest rates will remain elevated. The bank also forecasts the Federal Reserve will raise interest rates by 25 basis points at its October 2026 meeting, providing additional support for reserve income generated by USDC holdings.