Shares of Circle Internet Group (CRCL) surged more than 6% in trading Tuesday, reaching $101.90, extending a rally that began Monday amid escalating geopolitical tensions in the Middle East. The stock has risen over 20% this week, significantly outpacing broader market performance following recent airstrikes by Israel and the United States in Iran.
The unexpected beneficiary of the heightened conflict, Circle, derives the majority of its revenue from interest earned on U.S. Treasury securities held as reserves backing its USDC stablecoin. Analysts at Mizuho Securities attributed the stock’s gains to a diminished probability of Federal Reserve interest rate cuts, a scenario fueled by a sharp increase in oil prices.
Brent crude futures exceeded $83 per barrel Tuesday, marking a 17% climb over five trading days, and a 37% year-to-date advance. Higher crude prices raise concerns about rekindled inflationary pressures, potentially prompting the Federal Reserve to maintain higher interest rates for a longer period. Elevated interest rates directly benefit Circle by increasing the yield on its substantial U.S. Treasury holdings.
Mizuho analyst Dan Dolev raised his price target for Circle to $100 from $90 whereas maintaining a neutral rating. Dolev and colleague Alexander Jenkins estimate that reduced expectations for rate cuts could add approximately 1% to Circle’s revenue forecasts for 2026 and 2027. They also highlighted a doubling in the probability of no rate cuts occurring in 2026, based on data from the Chicago Mercantile Exchange (CME) FedWatch, a shift that could further bolster Circle’s valuation.
The rally follows a more than 45% gain last week, driven by a short squeeze following the company’s fourth-quarter earnings report. That move reversed an 80% decline from record highs reached last year.
While higher interest rates provide a near-term boost, Mizuho’s report cautioned that longer-term revenue growth could be challenged by increasing commoditization within the stablecoin market. The firm currently holds approximately $75.2 billion in USDC in circulation as of late February.
Bitcoin, which initially declined sharply at the outbreak of conflict over the weekend, has since stabilized and risen roughly 5% over the past 24 hours, trading around $68,100. The cryptocurrency’s recovery may also be contributing to positive sentiment in the digital asset space.
