JPMorgan sees Hyperliquid partnership weighing on Circle, Coinbase

Hyperliquid's deal with Circle and Coinbase creates a "prisoner's dilemma" that puts pressure on earnings from the dollar-pegged stablecoin.

JPMorgan sees Hyperliquid partnership weighing on Circle, Coinbase

Finance

JPMorgan says Hyperliquid's rise threatens Circle's USDC economics

Hyperliquid's deal with Circle and Coinbase creates a "prisoner's dilemma" that puts pressure on earnings from the dollar-pegged stablecoin.

By

Will Canny

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AI Boost

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Edited by

Sheldon Reback

Jul 14, 2026, 2:57 p.m.

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Jeremy Allaire Circle CEO. (The Washington Post / Getty Images)

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JPMorgan said a new arrangement with Hyperliquid is a near-term revenue headwind for Circle and Coinbase, with a greater long-term threat to Circle's USDC economics.

The bank argued the deal exposes a "prisoner's dilemma," encouraging Circle and Coinbase to compete for USDC distribution at the expense of each other's economics.

The Wall Street firm lowered earnings estimates for both firms, citing the Hyperliquid changes alongside weaker crypto trading volumes and asset prices.

JPMorgan (JPM) lowered its forecasts for Circle Internet (CRCL) and Coinbase (COIN), saying their

revamped agreement with Hyperliquid

weakens the economics of Circle's USDC and posed a bigger long-term threat to the stablecoin issuer.

The bank said the deal created a "prisoner's dilemma," incentivizing stablecoin issuer Circle and crypto exchange Coinbase to compete for distribution of the dollar-pegged token at the expense of each other's economics.

Hyperliquid, now one of the largest crypto trading venues, holds about $6 billion of USDC, or roughly 8% of the circulating supply, JPMorgan estimated.

"We think the change in the Hyperliquid relationship showcases the challenge for Circle and Coinbase partnership agreements because it can create 'a prisoner’s dilemma' that drive Coinbase and Circle to compete with each other when promoting USDC distribution," analysts led by Kenneth Worthington said in the Tuesday report.

Hyperliquid is one of crypto's fastest-growing trading venues and the leading decentralized perpetual futures exchange. The platform processed more than $150 billion in trading volume in July alone, while its volume relative to Binance climbed to 11.5%, underscoring its growing share of the derivatives market. USDC balances on Hyperliquid have swelled to roughly $6 billion, making it an increasingly important distribution channel for the stablecoin.

Under the new arrangement, Coinbase will classify USDC on Hyperliquid as "on-platform," collecting the income generated by reserves and paying 90% of it to Hyperliquid. JPMorgan estimated Coinbase previously split nearly all of the revenue evenly with Circle.

The bank cut earnings estimates for both companies, citing the Hyperliquid agreement and weaker crypto markets, though it expects higher interest rates to provide some support for USDC-related revenue over the longer term.

USDC has also lost momentum in recent months. Its circulating supply has fallen to about $73 billion from nearly $80 billion in March, part of a broader $10 billion contraction in the stablecoin market since May as crypto trading activity cooled and new regulated rivals chipped away at the dominance of USDC and Tether's USDT.

Japanese investment bank Mizuho said in a report last week that Circle's final approval from the U.S. Office of the Comptroller of the Currency to establish First National Digital Currency Bank is a

positive milestone

, but investors may be overestimating its significance.

Read more:

Hyperliquid's USDC deal could supercharge HYPE, pressure Circle, Coinbase margins, analysts say

Circle

Coinbase

Hyperliquid

JPMorgan

Stablecoins

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