Overview
JPMorgan Chase & Co. has trimmed its financial forecasts for Circle Internet Group Inc. and Coinbase Global Inc., attributing the adjustment to a change in how reserve income from USDC — the world’s second-largest stablecoin — will be split under a new partnership with crypto exchange Hyperliquid. The bank signaled that the revised arrangement presents immediate revenue headwinds for both companies.
Deal mechanics and market scope
Circle and Coinbase announced on May 14 that they would partner with Hyperliquid to broaden USDC adoption. Hyperliquid functions as both a Layer-1 blockchain and a decentralized exchange for spot and derivatives trading, and it has built traction for perpetual futures tied to crypto tokens and tokenized real-world assets.
As of June 11, USDC became Hyperliquid’s preferred stablecoin. Under the newly described structure, Coinbase will treat any USDC held on Hyperliquid as "on-platform," such that Coinbase earns the reserve income associated with that float but must remit 90% of the float back to Hyperliquid. JPMorgan estimated that Hyperliquid held about $6.0 billion of USDC, equal to roughly 8% of total USDC supply, as of Sunday.
Analysts’ take and competitive risks
JPMorgan’s analysts characterized the setup as creating a "prisoner’s dilemma" that could drive Circle and Coinbase into competitive rather than collaborative behavior when marketing USDC distribution. The bank warned that this dynamic may pressure revenue in the near term for both firms.
Quarterly and longer-term estimates
For the second quarter, JPMorgan left Circle’s GAAP earnings-per-share estimate unchanged at $0.16. By contrast, it revised its adjusted diluted EPS forecast for Coinbase downward to negative $0.01. The bank noted that the complete effect of the Hyperliquid relationship is not expected to appear in second-quarter results but will be reflected in the second half of 2026.
Despite the near-term pressure, JPMorgan said it expects USDC-related earnings to increase through 2027 on the assumption of higher interest rates. The firm now projects a 25 basis point rate increase at the October 2026 meeting, which it sees as supportive of longer-term reserve income trends.
Market backdrop
JPMorgan also trimmed estimates to account for a soft cryptocurrency market during the quarter. The bank reported that total crypto market capitalization fell 13% over the quarter, spot trading average daily volume declined 24% quarter-over-quarter, and decentralized finance total value locked dropped 23%.
Market performance
Year-to-date through the period cited, shares of Circle were down about 25%, while Coinbase’s stock had risen roughly 2%.
Implications
JPMorgan’s note highlights two sources of pressure: the revised income-splitting mechanics tied to the Hyperliquid arrangement and broader weakness across crypto markets. Both factors informed its lower near-term forecasts for the two companies, even as the bank anticipates a pickup in USDC-related earnings over a longer horizon tied to its rate outlook.
Editors’ note: This article presents JPMorgan’s assessment of the partnership and market conditions as reported by the bank. Specific timing and magnitude of impacts will be reflected in corporate reporting and future market developments.