Tether and banks flank Circle — here’s how the $78bn stablecoin issuer can stay a ‘long-term category winner’

Circle is beleaguered on all sides.

Not only is the $78 billion stablecoin issuer under pressure from archrival Tether, the world’s leading stablecoin issuer, which has made several overtures to challenge Circle on its US home market, but fintech firms and Wall Street giants are increasingly announcing initiatives to launch fiat-pegged cryptocurrencies of their own.

Even so, analysts at wealth management firm Bernstein just dropped a huge vote of confidence in Circle’s chances to navigate these tumultuous times.

“We believe Circle is a long-term category winner,” Bernstein analysts wrote in a report on Tuesday.

“Its regulatory edge, strategic partnerships, liquidity head-start and technology-stack create a competitive moat that we believe is difficult for rivals to replicate.”

The bullish forecast comes as Circle’s stock has more than doubled over the last year.

Now, analysts at Bernstein are forecasting another 71% rally to $190 from its current price of $111.

The reasons are myriad.

For starters, the supply of Circle’s stablecoin, USDC, has risen steadily just as the wider crypto market has fallen.

The company is also tapping into artificial intelligence tools, including newly released infrastructure called nanopayments.

Circle’s big year

With Circle’s entry into the public markets and the passage of landmark stablecoin legislation in the US last summer, the company has been one of the few that investors can turn to to bet on the steady rise of stablecoins.

And rise they have.

The total market for stablecoins has more than doubled, from $131 billion in January 2024 to over $314 billion today, according to DefiLlama data.

Circle has been a major winner of that growth.

In 2025, Circle recorded over $2.7 billion in revenue, a 64% increase over 2024, according to the latest filings.

The rise was driven primarily by its core business of earning revenue from its reserve assets, of which more than 84% are government-backed obligations, according to its latest transparency report.

Transaction revenue, however, remains the fastest-growing business segment for Circle, rising 112% year-over-year.

The company chalked this growth up to the adoption of USDC among buzzy applications, such as prediction markets.

And Circle CEO Jeremy Allaire seems confident that this is just the beginning as AI and blockchain technology continue to influence the world economy.

“We are in the earliest stages of a very deep and very fundamental transformation of the way the global economic system functions and works,” he said during a February earnings call.

Bernstein bets big

Analysts at Bernstein share that sentiment and said they expect many of these tailwinds to continue.

Circle’s divergence from broader crypto sentiment is evident in USDC’s growth amid Bitcoin’s crash, as well as in the stablecoin’s use in sectors outside the crypto industry, which analysts highlight as pointing to a relatively resilient business.

The analysts also touch on Circle’s entrance into AI via a new product called Nanopayments.

A viral report in February by research firm Citrini painted a gloomy picture of AI adoption wreaking havoc on the economy. The outlet also suggested that as AI becomes more ubiquitous, AI agents would prefer to use stablecoins rather than traditional payment rails.

Nanopayments are Circle’s attempt to accommodate such a future.

The infrastructure enables tiny, high-frequency transactions among different AI agents in so-called machine-to-machine marketplaces.

The infrastructure is built atop a protocol called x402, developed by Coinbase, one of Circle’s key partners.

Bernstein advises taking this vision with a grain of salt.

After all, linking cards to autonomous agents should be trivial. That may change, however, if there are millions of agents.

“Circle’s nanopayments are in early days,” Bernstein writes. “Low volumes today are a function of agentic workflows being nascent as well, and cards fulfil the current basic design.”

Tether closing in

To be sure, Circle isn’t alone in taking advantage of the clear stablecoin regulations in the US.

Tether, the powerhouse behind the $184 billion stablecoin USDT, may have been locked out of the American market for years, but it is increasingly showing that it is ready to tap back into it.

In January, Tether launched USAT, a dollar-pegged, federally regulated stablecoin, to re-enter the US. The move is a direct shot at Circle, which has largely dominated the US market.

So far, however, trades in USAT aren’t overwhelming.

Just under $20 million worth of USAT has been issued so far, according to DefiLlama.

Even so, Tether’s leadership is bullish about its chances.

Bo Hines, the CEO of USAT, which used to run the White House’s crypto council, recently said that Tether is “probably the crypto company that’s sweating the least.”

The reason?

Tether’s diversified assets include gold, land and, as of last week, an AI-enabled mattress company.

Elsewhere, fintech giants like PayPal, Stripe, and Klarna, as well as several banks, are said to be expanding their stablecoin services.

Liam Kelly is a DeFi Correspondent at DL News. Got a tip? Email him at [email protected].