TLDR
- JPMorgan cut Coinbase adjusted diluted EPS forecast to -$0.01.
- Circle’s Q2 GAAP EPS estimate remained at $0.16.
- Hyperliquid held about $6B USDC, nearly 8% of supply.
- Coinbase will pay 90% of Hyperliquid USDC reserve income back to the platform.
- JPMorgan called the setup a “prisoner’s dilemma” for USDC partners.
JPMorgan has lowered its earnings forecasts for Circle Internet Group and Coinbase Global as Hyperliquid’s growing USDC role puts pressure on stablecoin revenue sharing.
Hyperliquid Deal Pressures USDC Economics
JPMorgan reduced its estimates after reviewing the revised arrangement involving Circle, Coinbase, and Hyperliquid. The bank said the deal creates near-term revenue pressure for both companies because it changes how income from USDC reserves flows through distribution partners.
Circle and Coinbase announced their Hyperliquid partnership on May 14 to expand USDC use on the trading platform. Hyperliquid operates as a Layer-1 blockchain and decentralized exchange, with spot and derivatives markets that have drawn strong trading activity.
JPMorgan described the setup as a “prisoner’s dilemma” for Circle and Coinbase. Analysts said the agreement could push both companies to compete with each other when promoting USDC distribution, even though both firms remain tied to the same stablecoin network.
Hyperliquid held about $6 billion of USDC, equal to roughly 8% of the stablecoin’s circulating supply. That balance makes the platform an important channel for USDC, especially as traders use stablecoins for derivatives, perpetual futures, and onchain settlement.
Coinbase Keeps Reserve Income but Pays Hyperliquid
Under the revised structure, Coinbase will treat USDC held on Hyperliquid as “on-platform.” That allows Coinbase to collect reserve income from those balances, but the company will pay 90% of the float back to Hyperliquid.
JPMorgan estimated that Coinbase previously split nearly all related revenue evenly with Circle. The new structure therefore changes the economics of a major USDC distribution channel and places more pressure on Circle’s share of reserve income.
The bank kept its second-quarter GAAP earnings per share estimate for Circle at $0.16. However, it lowered Coinbase’s adjusted diluted earnings per share forecast to negative $0.01, citing the Hyperliquid relationship and weaker crypto trading conditions.
JPMorgan said the full effect of the Hyperliquid deal will not appear in second-quarter results. The bank expects the changes to become more visible in the second half of 2026 as the new revenue-sharing model runs for a longer period.
Weak Crypto Markets Add Pressure
JPMorgan also trimmed estimates because broader crypto market conditions weakened during the quarter. Total crypto market capitalization fell 13%, while spot trading average daily volume dropped 24% from the prior quarter.
Decentralized finance total value locked also declined 23%, adding pressure to firms tied to trading activity and stablecoin flows. Lower market activity can reduce transaction revenue and slow demand for stablecoin balances across crypto platforms.
USDC has also lost some market momentum. Its supply fell to about $73 billion from nearly $80 billion in March, while the wider stablecoin market contracted as trading activity cooled and rivals competed for market share.
Even with near-term pressure, JPMorgan expects USDC-related earnings to improve through 2027 if interest rates remain higher. The bank now expects a 25 basis point rate increase at the October 2026 meeting, which could raise reserve income on stablecoin balances.
