Circle Internet Group (NYSE:CRCL) on Tuesday crashed 17% after a 140-company coalition launched Open USD, a rival stablecoin designed to split reserve yield with distribution partners instead of keeping it.

Why OUSD Is A Direct Threat To Circle’s Business Model

Circle makes roughly 99% of its revenue from interest earned on USDC (CRYPTO: USDC) reserves. 

Open USD targets that exact revenue stream by paying yield directly to its distribution partners, which include Visa (NYSE:V), Coinbase (NASDAQ:COIN), and BlackRock (NYSE:BLK), the same companies that currently distribute USDC.

Coinbase is one of USDC’s biggest distributors and now backs a direct rival that pays them a cut of the revenue Circle currently keeps, giving those partners a financial incentive to push OUSD over USDC going forward.

Circle’s CEO Fired Back, Pointing To USDC’s Dominant Network Effects

Circle CEO Jeremy Allaire responded on X, arguing USDC already controls 80% of all dollar stablecoin transactions on blockchains in Q1 2026, processing nearly $30 trillion, while all other stablecoins combined handled less than 0.5%.

Allaire called the consortium model structurally flawed, saying large groups of companies coordinate poorly and starve the infrastructure they’re supposed to support.

He also argued that giving away all reserve income leaves no capital to reinvest in the network, adding that the Coinbase partnership “remains as strong as ever.”

ARK Invest Bought The Dip, Adding $12.9 Million In Circle Shares Monday

ARK Invest purchased 169,777 shares of Circle worth roughly $12.9 million Monday, the day before the crash, as part of a broader $43.5 million crypto equity buying spree across ARKK, ARKW, and ARKF. 

The firm also added 122,544 Coinbase shares worth $18.6 million, along with positions in Bullish (NYSE:BLSH) and Robinhood (NASDAQ:HOOD).

Bernstein Sees 203% Upside Despite The OUSD Threat

Bernstein reaffirmed its outperform rating on Circle Wednesday with a $190 price target, implying 203% upside, arguing OUSD validates stablecoins as a category rather than threatening Circle’s position.

They also pushed back on the Coinbase concern, noting the exchange earns roughly 50% of USDC’s reserve income under its distribution deal with Circle, making a full pivot to OUSD financially self-defeating.

William Blair separately called OUSD “a solution searching for a problem.”

CRCL’s Chart Shows A Pattern Fully Invalidated In One Session

Circle’s 17% drop erased its entire recovery from early 2026, sending the stock back into the $50 to $65 demand zone that launched early 2026 rally.

Tuesday’s 2% bounce comes off deeply oversold levels with the Supertrend at $82.99 and the full bearish EMA stack overhead confirming the structural damage.

Holding the $50 to $65 zone and reclaiming the 20 EMA at $79.21 targets $82.99 then $89.70. Losing $61 opens a path toward $50 with no support in between.

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