Middle East tensions, higher oil boost Circle (CRCL) shares as rate-cut odds fade: Mizuho

Shares of stablecoin issuer Circle (CRCL) have surged over 20% following Israeli and U.S. airstrikes on Iran, which have escalated Middle East tensions and caused a sharp rise in oil prices. Mizuho analysts attribute this rally partly to the resulting decline in expectations for Federal Reserve rate cuts. Higher oil prices can reignite inflation, supporting the "higher-for-longer" interest rate environment, which benefits Circle because it earns significant revenue from interest income on the U.S. government debt backing its USDC stablecoin reserves. Analysts estimate that reduced rate cut expectations add about 1% to Circle's 2026 and 2027 revenue forecasts and increase the "right tail risk" of a no-rate-cut scenario in 2026. Mizuho raised its price target for Circle to $100 from $90, though it maintained a neutral rating, noting that while higher rates are a near-term positive, long-term growth could face pressure from stablecoin commoditization. This recent surge follows a significant short squeeze after the company's fourth-quarter earnings.

(Source：CoinDesk)