Circle shares rise 4% as Polymarket-driven USDC growth prompts analyst upgrade

Core Viewpoint - Circle's stock (CRCL) experienced a 4% increase following an upgrade to neutral by Mizuho, driven by increased activity on the crypto prediction platform Polymarket, which is expected to boost the demand for Circle's stablecoin, USDC [1] Group 1: Market Activity and Projections - Mizuho's analyst Dan Dolev highlighted that Polymarket's trading volumes for 2026 are projected to reach around $50 billion, which is three times the volume of 2025, indicating a significant growth opportunity for USDC [2] - The current run-rate on Polymarket could potentially increase USDC's market cap by approximately 25% or more [2] - Dolev raised his forecasts for the average USDC in circulation for 2026 and 2027 by approximately 7% and 21% respectively, leading to revenue estimates increases of about 6% and 21% for those years [3] Group 2: Broader Trends and User Base - The rise of event-driven crypto trading is attributed to the diversification of prediction markets into areas such as sports, economics, and pop culture, which has attracted a larger user base [3] - Polymarket is noted for drawing non-crypto-native users into the crypto space through event trading, thereby increasing demand for USDC from outside the traditional DeFi audience [3] Group 3: Competitive Landscape and Price Target - Despite the positive outlook from Polymarket, Dolev refrained from issuing a bullish call, setting a price target of $77, indicating only modest upside from the current price just above $70 [4] - Adverse factors such as potential rate cuts, rising distribution costs, and competition from Tether (USDT) and other financial institutions launching their own stablecoins are seen as offsetting the potential benefits from Polymarket [4] - Circle's stock increase occurred amidst a general decline in crypto-related stocks, coinciding with the stagnant price of bitcoin, which remains below $90,000 [4]