Jefferies advises against buying the dip in Circle stock

Following a 17% plunge and subsequent 5% rebound in Circle (CRCL) stock, global investment bank Jefferies has stated it would not advise buying the dip. The initial drop was triggered by the announced launch of the OpenUSD (OUSD) stablecoin by OpenStandard, a consortium of over 140 payment and crypto firms including Visa and BlackRock. According to Jefferies, the headwinds for Circle are unlikely to ease, as the new competition could pressure USDC's supply growth and market share. The bank noted that the new competitor has a large distribution network, an advantage Circle lacked in its early days. Jefferies identified Coinbase's participation in the OpenUSD project as a particular risk. Approximately 95% of Circle's revenue comes from interest on its USDC reserves, making the company highly dependent on its largest distribution partner, Coinbase. The contract between the two firms is reportedly up for renewal in August. While Jefferies does not see Coinbase's involvement as a sign it will abandon USDC, the bank explained that the exchange promoting a rival stablecoin could impede USDC's growth.