Tensions in the Middle East have sent oil prices soaring, which has wonderfully supported Circle's shares. Last week, Circle (CRCL) experienced a 20% increase and outperformed the overall market following airstrikes by Israel and the US against Iran over the weekend.

Analysis from Japanese bank Mizuho helps explain this situation. Rising oil prices could revive inflationary pressures and reduce the likelihood of the Federal Reserve cutting interest rates. This is where Circle's story begins. The company's revenue largely comes from interest income earned on US government bonds backing the USDC stablecoin. Higher interest rates mean better returns on these reserves. Conversely, rate cuts move in the opposite direction.

After the weekend attacks, WTI crude oil rose approximately 7%–8%. The increase was triggered by rising geopolitical risks and concerns over supply disruptions. Cryptocurrency markets also felt this news. Bitcoin initially experienced a sharp decline but has stabilized since then. It is currently trading around $72.66.

According to calculations by analysts Dan Dolev and Alexander Jenkins, the decreasing expectation of rate cuts added about 1% to Circle's revenue forecasts for 2026 and 2027. Even more interesting, CME FedWatch data shows that the scenario of no rate cuts in 2026 doubles the "tail risk" on the right side. This change further amplifies Circle's valuation multiple.

Mizuho has raised its target price from $90 to $100. At the time of publication, the stock was trading at $101.90, up 6%. They maintained a neutral rating, but the numbers speak for themselves.

Prolonged high interest rates are great for Circle in the short term, but according to the report, in the long term, revenue growth could be under pressure as stablecoins increasingly become commodities. Still, the shares, which gained over 45% last week, mark the end of a 80% decline after reaching record highs last year.