Circle's stock dropped 2.3% on Wednesday after a report showed traditional banks are exploring their own stablecoins, before clawing back more than 2% in pre-market trading. Bernstein still holds a bullish $140 price target on the stock even as an analyst warns bank distribution could cut into Circle's stablecoin market share.
Circle (CRCL) shares closed down 2.3% at $89.91 on Wednesday, before recovering more than 2% in pre-market trading. The stock is still up over 14% over the past five sessions and around 44% over the past month.
Bank Stablecoin Report Rattles Circle
A Wall Street Journal report showed that JPMorgan Chase has examined the possibility of issuing a stablecoin, though the bank said it has no current plans to launch one. The report also found that Bank of America, Wells Fargo, and Santander are exploring a joint stablecoin initiative.
Wall Street banks had previously questioned whether customers needed stablecoins and often promoted tokenized deposits instead, but that stance now appears to be evolving. Because banks could bring enormous customer networks to the stablecoin market, traders are questioning whether the shift can challenge USDC's dominance.
Analyst Flags Threat to USDC's Share
Analyst Shay Boloor argued that large-scale bank distribution could reduce the amount of stablecoin activity flowing through Circle and USDC. The concern has gained attention as other major companies enter the sector, with Visa, BlackRock and Google increasing their involvement in stablecoins.
Circle Still Holds Structural Advantages
Despite the competitive threat, Circle retains several advantages. Its Arc blockchain initiative is preparing for a public mainnet launch in September, and last month it secured a regulatory nod from the U.S. Office of the Comptroller of the Currency for its national trust bank, Circle National Trust.
Bernstein analysts have also kept a bullish outlook on Circle, setting a $140 price target and saying the company's growth prospects don't depend on the CLARITY Act's passage.
Source: CoinGape
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