Mizuho kept its Underperform rating and cut its price target to $43 from $45, saying AI "agents" could move users toward insured, higher-yielding accounts. Circle was the weakest major U.S. crypto stock on a day the Nasdaq rose.
A new kind of competitive threat landed on the stablecoin business on Monday: software that decides where people keep their cash.
Shares of Circle Internet Group, the issuer of the USDC stablecoin, fell 7.21% to $79.72 by early afternoon, from Friday's close of $85.91, after touching $78.81. Coinbase was down 2.72%, while the Nasdaq Composite rose 0.88%. Circle was the weakest of the major U.S. crypto stocks on the day.
The decline followed a note from Mizuho, which kept its Underperform rating and lowered its price target to $43 from $45. That target is about 46% below Monday's price.
The argument
Mizuho's case, according to reports of the note, is that AI personal-assistant "agents" could steer users away from USDC toward FDIC-insured, higher-yielding alternatives. The bank estimated that this could put $4 billion to $9 billion of USDC's market value and 10% to 20% of Circle's reserve income at risk, and it trimmed its 2027 Ebitda estimate by about 5%.
The logic runs through what Mizuho calls reserve income: the return Circle earns on the assets backing USDC. The more USDC in circulation, the more it earns. If software that manages a user's money is programmed to look for the best insured yield, a dollar token that pays its holder nothing could lose balances it would otherwise keep through inertia.
USDC supply had already fallen by about $4.69 billion over the previous 30 days, according to Cryptopolitan.
What the note is and isn't
Mizuho did not downgrade the stock; it was already rated Underperform, and the target change was $2. The move in Circle's shares was larger than the moves in bitcoin or Coinbase, which suggests the note was the main stock-specific factor, but no single cause can be established.
Two readings
One reading is that Mizuho has identified a real, medium-term risk. Stablecoin issuers depend on holders leaving money idle, and automated agents that optimize for yield would erode exactly that.
The other is that the reaction is out of proportion to the change. A bearish analyst trimmed an existing target by $2, the threat depends on how quickly AI agents come to manage people's cash, which the note cannot show, and Circle's shares were already sensitive to falling USDC supply and interest rates.
What to watch
Any response from Circle, USDC supply over the coming weeks, the Fed decision on Wednesday for its effect on reserve income, and Circle's third-quarter results on Nov. 4.