Analysts at Bernstein have reiterated a bullish stance on stablecoin issuer Circle, arguing that a new growth cycle for its USDC stablecoin could deliver a significant boost to the company over the next 12 months.

In a research note published Monday, Bernstein said USDC (USDC) is showing signs of what the firm described as "digital dollar reflation," after the stablecoin's supply expanded by roughly $2 billion over seven days — a move that reversed a six-month stretch of stagnant or declining growth.

Supply growth feeds directly into Circle's business model. The issuer earns interest on the reserves backing USDC — held mainly in cash and short-dated US Treasuries — so a larger circulating supply expands the interest-earning asset base that generates the bulk of its revenue. A portion of that reserve income is shared with distribution partners such as Coinbase.

Bernstein maintained an Outperform rating on Circle (CRCL) and a $140 price target, implying roughly 60% upside from current levels. Circle shares have climbed approximately 40% over the past month.

According to the analysts, the next phase of stablecoin growth could be driven by several factors: renewed momentum in crypto markets, greater regulatory clarity in the United States, the development of tokenized capital markets, and growing adoption of stablecoins for payments. They also noted early signs of stablecoin use in payments made by artificial intelligence agents.

The US regulatory backdrop shifted in July 2025, when the GENIUS Act was signed into law, creating a federal framework for payment stablecoins that requires issuers to back their tokens one-for-one with high-quality liquid assets.

Although USDC remains the second-largest dollar-backed stablecoin by market capitalization, well behind Tether's USDt (USDT), it has gained significant ground in transaction activity. Bernstein said USDC's share of adjusted stablecoin transaction volume rose from roughly 40% in 2025 to more than 60% so far in 2026, overtaking USDt by that measure. Overall stablecoin transaction volume has grown significantly this year, according to Bernstein. USDC also competes with a widening field of smaller issuers, including PayPal's dollar-backed PYUSD.

Circle's volatile path since its IPO

Circle shares have experienced significant swings since the company went public in June 2025. The stablecoin issuer priced its shares at $31 and raised roughly $1.1 billion in its initial public offering. After surging in the months following its debut, the stock had fallen back toward its IPO price by November 2025, as a broader crypto market downturn weighed on publicly traded companies with exposure to the sector.

In its most recent quarter, Circle reported $701 million in revenue and $48 million in net income, both up from a year earlier. In its regulatory filings, Circle has noted that this reserve-income-driven model leaves its earnings sensitive to changes in benchmark interest rates.