JPMorgan Lowers Coinbase, Circle Estimates on New Hyperliquid USDC Deal

JPMorgan Chase & Co. has lowered its financial estimates for Circle Internet Group Inc. and Coinbase Global Inc., citing near-term revenue challenges from a new partnership with crypto exchange Hyperliquid. In a note to clients Tuesday, the bank said a revised agreement on how income from Circle's USDC stablecoin is shared will impact both companies' earnings.

A New Revenue-Sharing Model

The adjustment stems from a partnership announced on May 14 to expand USDC adoption on Hyperliquid, a decentralized exchange and Layer-1 blockchain. Under the new structure, Coinbase will classify all USDC held on Hyperliquid as "on-platform." This allows Coinbase to earn all associated reserve income but requires it to pay 90% of that float back to Hyperliquid.

JPMorgan estimates that Hyperliquid held approximately $6.0 billion of USDC as of Sunday, which represents about 8% of the stablecoin's total supply. The bank's analysts described the situation as a "prisoner's dilemma" that could push Circle and Coinbase into competition over USDC distribution.

Revised Financial Forecasts

As a result of the new arrangement and weaker crypto market conditions, JPMorgan has adjusted its forecasts. The bank lowered its adjusted diluted earnings per share (EPS) estimate for Coinbase to negative $0.01. It maintained its second-quarter GAAP EPS estimate for Circle at $0.16.

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The full financial impact of the Hyperliquid relationship is not expected to appear in second-quarter results but will be incorporated into estimates for the second half of 2026. The bank also noted broader market headwinds, including:

• Total crypto market capitalization fell 13% during the quarter.
• Spot trading average daily volume declined 24% quarter-over-quarter.
• Total value locked in decentralized finance (DeFi) dropped 23%.

Longer-Term Outlook

Despite the near-term pressures, JPMorgan analysts said they expect longer-term earnings related to USDC to increase through 2027. This forecast is based on expectations of higher interest rates, with the bank now projecting a 25 basis point rate increase at the October 2026 Federal Reserve meeting.