JPMorgan says Hyperliquid's rise threatens Circle's USDC economics

Finance JPMorgan says Hyperliquid's rise threatens Circle's USDC economics Hyperliquid's deal with Circle and Coinbase creates a "prisoner's dilemma" that puts pressure on earnings from the dollar-pegged stablecoin. By Will Canny , AI Boost | Edited by Sheldon Reback Jul 14, 2026, 2:57 p.m. 2 min read Make preferred on Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Make preferred on Jeremy Allaire Circle CEO. (The Washington Post / Getty Images) Summary Show JPMorgan said a new arrangement with Hyperliquid is a near-term revenue headwind for Circle and Coinbase, with a greater long-term threat to Circle's USDC economics. The bank argued the deal exposes a "prisoner's dilemma," encouraging Circle and Coinbase to compete for USDC distribution at the expense of each other's economics. The Wall Street firm lowered earnings estimates for both firms, citing the Hyperliquid changes alongside weaker crypto trading volumes and asset prices. JPMorgan (JPM) lowered its forecasts for Circle Internet (CRCL) and Coinbase (COIN), saying their revamped agreement with Hyperliquid weakens the economics of Circle's USDC and posed a bigger long-term threat to the stablecoin issuer. The bank said the deal created a "prisoner's dilemma," incentivizing stablecoin issuer Circle and crypto exchange Coinbase to compete for distribution of the dollar-pegged token at the expense of each other's economics. Hyperliquid, now one of the largest crypto trading venues, holds about $6 billion of USDC, or roughly 8% of the circulating supply, JPMorgan estimated. "We think the change in the Hyperliquid relationship showcases the challenge for Circle and Coinbase partnership agreements because it can create 'a prisoner’s dilemma' that drive Coinbase and Circle to compete with each other when promoting USDC distribution," analysts led by Kenneth Worthington said in the Tuesday report. Hyperliquid is one of crypto's fastest-growing trading venues and the leading decentralized perpetual futures exchange. The platform processed more than $150 billion in trading volume in July alone, while its volume relative to Binance climbed to 11.5%, underscoring its growing share of the derivatives market. USDC balances on Hyperliquid have swelled to roughly $6 billion, making it an increasingly important distribution channel for the stablecoin. Under the new arrangement, Coinbase will classify USDC on Hyperliquid as "on-platform," collecting the income generated by reserves and paying 90% of it to Hyperliquid. JPMorgan estimated Coinbase previously split nearly all of the revenue evenly with Circle. The bank cut earnings estimates for both companies, citing the Hyperliquid agreement and weaker crypto markets, though it expects higher interest rates to provide some support for USDC-related revenue over the longer term. USDC has also lost momentum in recent months. Its circulating supply has fallen to about $73 billion from nearly $80 billion in March, part of a broader $10 billion contraction in the stablecoin market since May as crypto trading activity cooled and new regulated rivals chipped away at the dominance of USDC and Tether's USDT. Japanese investment bank Mizuho said in a report last week that Circle's final approval from the U.S. Office of the Comptroller of the Currency to establish First National Digital Currency Bank is a positive milestone , but investors may be overestimating its significance. Read more: Hyperliquid's USDC deal could supercharge HYPE, pressure Circle, Coinbase margins, analysts say Circle Coinbase Hyperliquid JPMorgan Stablecoins AI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards . For more information, see CoinDesk's full AI Policy . Latest Crypto News 1 Ethereum Foundation spinout EthSystems targets banks with blockchain privacy technology 26 minutes ago 2 For pension funds, tokenization’s real play is balance-sheet management, Fidelity’s Lai says 52 minutes ago 3 Hut 8 price target hiked to $165 at Benchmark as AI pivot reshapes valuation 2 hours ago 4 U.S. June CPI fell 0.4%, likely cooling move toward Fed rate hikes 2 hours ago 5 ECB picks firms including Deutsche Bank, Revolut for digital euro pilot 2 hours ago 6 Japan’s biggest card network taps Circle to bring stablecoins to 40 million merchants 2 hours ago 7 U.S.-Iran escalation weighs on bitcoin, stocks as oil climbs 3 hours ago 8 Bitcoin's BIP-110 sparked a fight over who gets to decide the future of Bitcoin 3 hours ago 9 Prediction markets just crushed traditional sportsbooks in a massive $50 billion World Cup breakout 3 hours ago 10 Bitcoin’s great rotation: Long-term holders pass supply to a new generation of buyers 4 hours ago Latest Research Gate Leads Spot Market Share Gains as CEX Volumes Rise for First Time in Five Months Gate Leads Spot Market Share Gains as CEX Volumes Rise for First Time in Five Months CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B. By CoinDesk Research Jul 13, 2026 CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B. Why it matters : CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B. View Full Report More From Finance Hut 8 price target hiked to $165 at Benchmark as AI pivot reshapes valuation ECB picks firms including Deutsche Bank, Revolut for digital euro pilot Japan’s biggest card network taps Circle to bring stablecoins to 40 million merchants