JPMorgan Slashes Circle and Coinbase Outlook Over Hyperliquid Deal

Under the terms of the new arrangement, Coinbase classifies USDC held on Hyperliquid as on-platform balances. While Coinbase retains the reserve income generated by these deposits, it is now obligated to return 90% of that revenue to Hyperliquid rather than splitting the proceeds with Circle. With Hyperliquid currently holding approximately $6 billion in USDC—roughly 8% of the total circulating supply—JPMorgan analysts expect this shift to create significant margin pressure for both companies.

This deal, which solidified USDC as Hyperliquid’s preferred stablecoin on June 11, highlights a growing struggle for market share. JPMorgan contends that the drive to expand adoption is increasingly coming at the expense of profitability, as platforms leverage their distribution power to demand larger slices of reserve yield. While firms like Mizuho have joined the chorus of caution regarding these economic concessions, others such as Bernstein and William Blair maintain a bullish stance, banking on the broader growth of digital dollar usage.

Despite the downgrade, JPMorgan still projects an increase in USDC-related earnings through 2027. This optimism hinges on a forecasted 25-basis-point Federal Reserve rate hike in October 2026, which would boost the yield on the Treasury reserves backing the stablecoin. However, the broader investor focus has shifted; the debate is no longer solely about the volume of circulating supply, but rather the sustainability of the profit-sharing models currently being forged across the crypto ecosystem.